What is a SBA Standard 504 loan?

The 504 loan is a common SBA loan and is your best option for fixed-rate and long-term financing for fixed assets such as buildings, facilities, and land. If you need a loan for working capital or inventory purposes, check out our SBA 7(a) loan options.

What is the eligibility for a SBA 504 loan? Can I qualify for a 504 loan?

According to the SBA, your business must: 

• Operate as a for-profit company in the United States or its possessions
• Have a tangible net worth of less than $15 million
• Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

Other general eligibility standards include falling within SBA size guidelines, having qualified management expertise, a feasible business plan, good character and the ability to repay the loan.

Loans cannot be made to businesses engaged in nonprofit, passive, or speculative activities. For additional information on eligibility criteria and loan application requirements, small businesses and lenders are encouraged to contact a Certified Development Company in their area.

Your financing must:

be used for a range of assets that promote business growth and job creation. These include the purchase or construction of: 

• Existing buildings or land 
• New facilities 
• Long-term machinery and equipment

Or the improvement or modernization of: 

• Land, streets, utilities, parking lots and landscaping 
• Existing facilities 

Your financing cannot be used for:

• Working capital or inventory 
• Consolidating, repaying or refinancing debt 
• Speculation or investment in rental real estate

If you are not eligable for any reason, check out our SBA 7(a) loan options.

What is the advantage of an SBA loan?

SBA loans are generally easier to qualify for and have better terms for small businesses who 1) don't have established business credit or 2) have less than perfect credit.

SBA Guarantee

Depending on your loan type, see charts above, the SBA guarantees a majority of the loan. The guarantee takes away the risk of default and allows banks to offer competitive interest rates and terms. Complete our preliminary form today and start the application process.

Lower Down Payment Requirements For Commercial Real Estate Loans

Again, the SBA guarantees the loan and takes way the risk of default. Banks can offer equity contributions of as little as 10% to purchase commercial property when using an SBA loan program. Contact us to learn more about the application process.

Longer Repayment Terms For Commercial Real Estate Loans

The best part about SBA loans are the repayment terms. SBA allows you to pay off your loan early without penalty if your business is doing well. The SBA loan also offers longer terms limits for more flexible financing.

What is the disadvantage of an SBA loan?

The short answer is more paperwork and a longer process.

You will be required to fill out more paperwork than a typical commercial loan. The approval process can also take longer. You may also be required to sign personal guarantees.