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The SBA 504 loan program is economic development financing specifically designed to stimulate private-sector investment in long-term fixed assets to increase productivity, create new jobs and increase the local tax base. This is done by providing long-term, low down payment, reasonably priced fixed-rate loans to businesses which have the highest probability of successfully creating new jobs and competing in the world marketplace.
PRODUCT SPECIFICATIONS:
Structure:
- 50% bank or nonbank in 1st lien position
- 40% SBA 504 in 2nd lien position
- 10% equity injection
- New business or special purpose building will require 15 percent equity injection
- New business and special purpose building will require 20 percent equity injection
ADVANTAGES OF 504:
- Long-term, fixed-rate financing.
- 20 years on real estate, 10 years on equipment
- Low equity injection – 10 to 20 percent preserves working capital and increases return on equity.
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