The Small Business Association ("SBA") 504 Program was designed as a long-term financing tool to assist the private sector in the financing of long-term assets such as real estate. This unique program offers growing businesses a long-term fixed rate loan coupled with a variable rate loan. Typically, the fixed rate portion will represent 40% of the total facility with a lender providing 50% and the 10% balance in the form of equity from the borrower. The SBA fixed rate portion of the facility has a maximum limit of $4 million (for small manufacturers) and terms can be up to 20 years. The rate is tied to an increment above the current U.S. Treasury rate for 5- and 10-year maturities.
SBA 504 funds may have a variety of uses:
- Puchase of land and construction of new facilities
- Purchasing new equipment
- Renovation of existing facilities
- Purchase of new facilities
Examples of qualifying small businesses include:
- Manufacturing firms
- Wholesale / distribution facilities
- Hotels / motels
- Healthcare facilities
- Movie theatres
Business Finance & Development's team of experienced SBA 504 program experts working with your local Community Development Corporation (CDC) may be able to provide you with an attractive solution to your long-term capital requirements.
