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FAQs - SBA 504 Loan Process and Eligibility | 504 Capital


frequently asked questions
Q: What is a 504 Loan?
A Small Business Administration (SBA) 504 loan is facilitated by a Certified Development Company (CDC). This program was created to provide financing to small business owners to aid in the purchase of real estate, property, and heavy equipment or machinery.
CDCs are nonprofit organizations established to promote business development and economic prosperity. There are a few hundred nationwide, aiding small businesses across the country.
To be eligible for an SBA 504 loan you must own a small business as defined by the SBA and meet the following qualifications:  
  • Company average net income of less than $5 million after taxes for the previous 2 years.
  • Tangible net worth less than $15 million

Your SBA 504 loan will typically require one or two months to fund. Many variables may affect this timeline.

A standard SBA 504 loan will be funded by three parties; 10% investment from the borrower, 40% from CDC like 504 Capital, and 50% from the lender. The maximum amount from the lender is $5 million, or up to $5.5. million for manufacturing businesses.
The business owner is expected to pay 10% as an initial investment in the project.
The SBA considers businesses to be “small” when they have as much as $38.5 million in sales, and 1,500 employees.
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