This SBA program's objective is to achieve community economic
development through job creation and retention by providing
long-term fixed asset financing to eligible Small Business
Concerns.
The 504 financial package is a partnership between a Third Party
Lender, SBA and a Small Business Concern. A typical project
example is:
$500,000 total cost for land and building
Commercial lender (50%) $250,000
SBA 504 (40%) 200,000
Small Business Equity (10%) 50,000
The Small Business Administration may guarantee up to 40%, or a
maximum of $1 million in an approved project. The Small Business
Concern receiving financial assistance is required to inject at
least 10% of the total project cost. Third Party Lenders must
provide the remaining percent of the total project cost. Also,
they handle the interim financing to provide capital at project
start-up.
SBA 504 Project Eligibility
Proceeds for the project may be used for the purpose of assisting
with fixed asset financing:
* plant acquisition
* construction
* renovation or expansion, including the acquisition of land
* land and site improvements
* acquisition/installation of machinery and equipment
* interest on interim financing
* professional fees directly attributable and essential to the
project (surveying, engineering, architectural and legal).
SBA 504 Small Business Concern Eligibility
Eligibility
If financing is not available from non-federal sources on
reasonable terms, a Small Business Concern must meet the
following criteria to qualify for 504 assistance:
* must be a small business - 500 or fewer employees (some
exceptions)
* net worth must not exceed $6 million
* net profits after taxes must average less than $2 million
during the previous two years
* must be a for profit corporation, partnership or proprietorship
* project must demonstrate a significant impact of the community
primarily through job creation or retention
Ineligibility
The following types of Small Business Concerns are ineligible for
504 financing:
* non-profit organizations
* investment companies
* gambling facilities
* lending institutions
