SBA 504 loans are available to for-profit, non-publicly traded businesses in the area that meet small business underwriting criteria. The program is for loan amounts that exceed the limits of the Small Business Administration (SBA) loan amount of $5,000,000. Financing can be secured to purchase commercial property, machinery, or equipment. Commercial Mortgage Depot (CMD) helps businesses get financing in New York, New Jersey, Connecticut and Pennsylvania. Speak to our Clifton, NJ team about using the SBA 504 Loan program to suit your needs!

Using an SBA 504 Loan for Your Business Needs

The United States Small Business Administration (US SBA) created the 504 loan program for economic development purposes.  It assists small companies to grow their assets and gain capital to expand or start new lines of business. The program usually works with your company and a third-party lender using criteria for underwriting. Many prefer to see a down payment of at least 10% in order to provide funds. You must also satisfy SBA guidelines to qualify.

SBA Qualifications for 504 Loan Program

Typically, you should meet the below criteria to qualify:

  • Be a for-profit, non-publicly traded business.
  • Have evidence of business net worth that does not exceed $15 million.
  • Have an average net income of your business that does not to exceed $5 million over the previous two years.
  • Have personal liquidity of each principal not to exceed the total project costs of the proposed 504 loans.
  • Have business ownership that must be comprised of at least 51% U.S. citizens or Legal Permanent Residents.

How the SBA 504 Loan Program Helps Your Business Grow

The SBA 504 Loan Program supports many eligible costs for your business growth needs. These include many of the following:

  • Purchasing land
  • Acquiring existing buildings
  • Funding new construction costs
  • Expanding or renovating existing buildings
  • Securing long-term use equipment
  • Paying for professional fees
  • Refinancing existing debt (for expansion projects, debt refinancing cannot exceed 50% of the new expansion costs).

Funds cannot be used for the following ineligible costs, unfortunately:

  • Funding inventory
  • Securing working capital
  • Getting good will assets from business acquisition
  • Paying franchise fees
  • Making tenant improvements.

Apply for Your SBA 504 Loan Today

When you apply for your SBA 504 Loan, it is important to understand the structure, terms, and requirements of SBA programs. Most loans are fixed-rate terms based on treasury rates and are fully amortized over the life of the loan (avoiding balloon rates). Terms are usually 10, 15 or 20 years, including funds that are for machinery or equipment. In addition to that occupancy must usually be 51% of existing buildings (including renovations or expansions) and 60% for new construction projects (must occupy 80% within ten years).

Commercial Mortgage Depot (CMD) helps businesses get financing in New York, New Jersey, Connecticut and Pennsylvania. Speak to our Clifton, NJ team about using the SBA 504 Loan program to suit your needs!

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