What is the SBA 504 Loan Program

If you’re looking for a small business loan to acquire commercial real estate, heavy machinery, and equipment then the small business administration SBA 504 Loan Program is the most suitable choice.

Since it is fixed-cost and long-term as well as SBA-backed, the 504 Loan Program is one of the best financing options available for small business owners today.

In this guide, we will discuss the qualification, rates, and some different uses of the SBA 504 loan program, and how you apply for one in your business time of need.

How to apply for Small Business Administration – 504 Loan

To be eligible for a 504 Loan, your business must:

• Legal entity – corporation, partnership, sole proprietor, limited liability company.
• Located in the United States.
• Have a tangible net worth of less than $10 million.
• Have an average net income of less than $5 million after federal income taxes for the two years preceding your application.

Other common eligibility standards cover falling within SBA size guidelines, a feasible business plan, and the ability to repay the loan.

Loans can’t be made to businesses engaged in nonprofit, passive, or speculative activities.

What is the cost of the 504 Business Loan Program?

The U.S. Small Business Administration published the updated interest rates for the 504 Loan Program offered by Certified Development Companies (CDC). The program now offers 10, 20, and 25-year interest rates at 2.231 percent, 2.364 percent, and 2.399 percent, respectively. Small businesses can now apply for a 504 loan at these low-interest rates.

INTEREST RATES

• 2.75% for up to 25-Year.
• 2.71% for up to 20-Year.
• 2.43% for up to 10-Year.

TERMS

• 10, 20, or 25-year terms.

COLLATERAL REQUIREMENTS

• Required for loans over $25,000
• SBA uses a general security agreement (UCC) designating business assets as collateral, such as machinery and equipment, furniture and fixtures, etc.