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When applying for a 504 loan, businesses must meet each of the following requirements:
  • Property must be either owner-occupied or owned by an eligible passive company.  Borrowers are required to occupy at least 60% of the building if it's new construction and 51% if it's an existing building.  Various lease options exist between the proposed borrower/landowner and the tenant/operating entity. Generally, so long as both entities are otherwise eligible under SBA rules and both either are obligated or guarantee the debt, the project is eligible. 
  • Project must, according to SBA guidelines, promote economic development. Generally, this entails the creation or retention of jobs. For every $90,000 that SBA lends for most projects, or $140,000 for manufacturing or projects that meet an energy public policy goal, reasonable projections should indicate that one full-time equivalent job will be created or retained over the next two years. This requirement can be waved if the project meets an economic development objective, i.e., minority owned, veteran owned.  
  • The business must be for-profit and together with all affiliates must average less than $6.5 million in annual profits and $20 million in net worth. (Alternative, higher size standards are available in certain industries, i.e., manufacturing).
  • Total eligible project cost must be at least $125,000. This includes a minimum SBCC loan of $65,000. Larger loans are more cost-effective.
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