504 Loan Program

What Is the New 504 Loan Program

504 Loan Program: Long-term, fixed-rate financing for large fixed assets that support job development and business expansion is made available through the 504 loan program.

SBA’s community-based partners, Certified Development Companies (CDCs), oversee nonprofit organizations and foster local economic development. Through CDCs, 504 loans are made available. The SBA certifies and oversees CDCs.

A 504 loan can have a maximum loan amount of $5.5 million.

Eligibility Criteria For 504 Loan Program

For your company to qualify for a 504 loan, it needs to: 
  • Function as a for-profit business in the US or any of its territories
  • have a less than $15 million tangible net worth.
  • have, for the two years before your application, an average net income of less than $5 million after federal income taxes

Additional requirements for eligibility include being within the SBA’s size restrictions, possessing suitable managerial experience, having a workable business plan, being of good character, and being able to repay the loan.

Also Read How To Get Asset Based Loan

504 Loan Program

Businesses involved in charitable, passive, or speculative endeavors are not eligible to receive loans. Local Certified Development Companies are a great resource for small businesses and lenders seeking further details on qualifying standards and loan application requirements.

How is a 504 loan Program used?

There are several uses for a 504 Loan Program that support the expansion of businesses and the creation of jobs. These consist of the acquisition or building of: 

  • Existing structures or territory 
  • Fresh amenities 
  • Long-term machinery and equipment, such as project-related AI-supported machinery or machinery for product manufacturing, having a minimum of ten years of useful remaining life

Or the Advancement or Contemporaries of:

  • Parking lots, streets, utilities, and landscaping
  • Current infrastructure

What You Cannot utilize a 504 Loan for Is

  • Inventory or working capital 
  • Debt consolidation, repayment, or refinancing 
  • Investing in rental real estate or engaging in speculation
  • Financing working capital, intellectual property, or soft costs for consulting services connected to AI

What Loan Application Do I Need to Submit?

The only source of 504 financing is Certified Development Companies (CDCs).To be sure you are working with a competent lender, locate a CDC in your community. CDCs will assist you in navigating the lender channels to create project finance because they are specially qualified to comprehend the requirements governing the 504 loan program.

How do I Repay my 504 Loan?

Current 504 Loans

Repayment terms for loans vary depending on several criteria. The Central Servicing Agent allows borrowers with active 504 loans to make payments, which are typically made by ACH monthly withdrawals. Also available for payment are checks and wire transfers.

Repayment Terms 
  • There are possible maturity terms of 10, 20, and 25 years. 
Interest Rates 
  • based on a rise over the going market rate for US Treasury notes with a 10-year maturity
  • amounts to roughly 3% of the debt; the loan may be used to finance the rate.

 

Get in touch with your CDC if you have any queries about the details of your loan, account balance, or due date.

Bought 504 Debentures.

To keep track of their loan status and make payments, borrowers who have debenture-purchased 504 loans can register for an account on the MySBA Loan Portal (lending.sba.gov).

  • Viste Short URL: 504 sba.gov
  • Last Updated May 3, 2024

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