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A CERTIFIED SBA 504 LENDER
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WHAT IS AN SBA 504 LOAN?
The SBA 504 loan program is a long-term financing tool for economic development within a community. The SBA 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land, buildings, or equipment. A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses.

Typically, a 504 project includes a loan secured with a senior lien from a local lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped.

What funds may be used for:
Proceeds from 504 loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.The program can also be used to refinance existing commercial loans whose proceeds were used for eligible 504 project costs.

The 504 Program cannot be used for working capital or inventory.

The maximum SBA exposure is $5,000,000. However special circumstances allow the exposure to increase to $5,500,000, such as loans to manufacturers or loans that improve energy consumption and fall under the Energy Loan Program.

Terms, Interest rates and Fees:
Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Maturities of 10 and 20 years are available. Fees total approximately 2.65 percent of the debenture and are financed with the loan.

Collateral:
Generally, the project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.

Eligible Business:
To be eligible, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business and it's affiliates qualify as small if they do not have a combined tangible net worth in excess of $15 million and do not have an average net income in excess of $5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.
Effective Rates
January 2018

20 Year Rate: 4.64%
10 Year Rate: 4.65%

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