504 Loan Program

504 Loan Program


  • Higher loan-to-value ratios allowed by 504 loans make qualifying easier. Business can borrow up to 90% of their financing needs thus preserving their cash.
  • 504 loans carry a below market fixed rate for the life of the loan. Fixed rates help maintain consistent cash flow in a fluctuating economy.
  • Longer repayment terms
  • SBA repayment periods are longer than most conventional loans with 10, 20 and 25 year terms. This makes monthly loan payments more affordable and helps to improve cash flow.
  • 504 Corporation works directly with SBA to process and close the 504 loan.



Business and its affiliates must meet one of the following SBA size standards:

1) Net Worth & Net Income standard:

a) Tangible net worth cannot be more than $20,000,000; AND

b) Two year, average, after tax net income cannot exceed $6,500,000.


2) Industry size standardsgross sales or full time equivalent jobs limits for each industry.

SBA’s Affiliation Overview

Companies are affiliated when one controls or has the power to control the other, either directly or indirectly (i.e. ownership, management, current/previous relationships, contractual, etc.)

(a) Stock Ownership Affiliation:

(1) 50 percent or more stock ownership or control of voting stock.

(2) One owner is large compared to any other individual or related block of stock.

(3) Two or more owners with approximately equal ownership percentages that are large compared to any other individual or like group of stock results in the block of equal owners and each owner separately to be controlling and affiliated unless evidence is shown to determine otherwise.

(4) Board of Directors, CEO and/or President may control when widely held voting stock and no single block of stock is large may create affiliation. CEO of two separate companies could make companies affiliated.

(b) Stock options, convertible securities, or agreements to merge may create affiliation.

(c) Common management, joint ventures, franchise or licensing agreements may create affiliation.

(d) Family members, common investments, or economically dependent may create affiliation.

(e) Officers, directors, owners, or key employees of one concern organize a new concern in the same or related industry with common contracts, customers, etc. may create affiliation.


Economic Development & Public Policy Goal Requirement:

All 504 Loan Projects must meet one of the following SBA Goals to be eligible for a 504 loan:

1) One job created for each $90,000 (Manufacturing – $140,000) of SBA 504 loan amount; or

2) Project located in rural area (outside the city limits of Metro City or 50,000 population) ; or

3) Operating business owned 51% by a women, veteran, or minority; or

4) Manufacturer; or

5) Located in an area with a community plan for redevelopment; or

6) Renewable energy project (geothermal, solar panels, energy efficient bldg., etc.); or

7) Businesses affected by new federal mandated requirements, base closings; or

8) Etc.


Eligible Uses of Funds:

1) Purchase bare land or land & building

2) Remodel of existing building

3) Construction of building

4) Purchase of furniture, fixture, & equipment

5) Bank “Interim” Loan Closing Costs & Interest Expense

6) Appraisal Report

7) Environmental Reports

8) Prior Land/Bldg./Equipment purchases not funded with a term note (contract or bank).

9) Refinance fixed asset debt up to 50% of new investments (#1 to #7 above). Refinanced debt is limited to the following debt:

a) 85% of the original debt proceeds must have financed fixed assets.

b) Current for last 12 consecutive months.

c) Reducing debt’s payments by 10%, or have a balloon feature, etc.



  1. Call or meet with the 504 Corporation to review project details and eligibility.
  2. Submit 504 application and other information (see below) to the 504 Corporation. Staff prepares credit write-up for Board’s review.  With the Board’s approval, the formal SBA 504 application is electronically sent to SBA.
  3. SBA reviews the application and emails their decision unless additional information is requested.

Click here to fill out the 504 application

Items needed for 504 Corporation Board Review:

  • SBA Form 1244 – Section 1 and SBA Form 1244 – Section 2
  • Environmental Investigation for real estate. All environmentally sensitive industries must begin with a Phase I.
  • History and Description of the Business (i.e.; market, products, competitors, trends, management, etc.)
  • Balance Sheet & Income Statements and Federal Tax Returns for the last 3 years
  • Interim Balance Sheet & Income Statement dated within 90 days
  • Personal Financial Statement (within 60 days) and Federal Tax Returns for the last 2 years for each owner and guarantor. May use own form, bank • form, or SBA Form 413.  Signed and dated by principal and spouse.
  • Resume (form attached to end of application) for each owner & key manager
  • Projected Income Statement, Balance Sheet and Assumptions for the first 2 years
  • Bank Commitment Letter
  • Business Plan required for start-up and businesses with significant changes. (Include Proforma Balance Sheet, Income Statements, and Monthly Cashflow for the first 12 months including assumptions)
  • Affiliate & Subsidiary businesses’ last two year-end financial statements and/or Federal Tax Returns for the last three years along with current financial statements
  • Copy of the Franchise Agreement/Franchisor’s Disclosure Statement & other significant licensing agreements (if applicable)
  • Cost Documents including land purchase agreement, architect’s estimated costs or contractor bids, quotes for machinery & equipment, etc.