SBA 504 Loans: SBA’s Premier Economic Development Program

The 504 Loan Program provides financing for fixed assets – commercial real estate and heavy equipment – to help small businesses grow and create jobs. The hallmarks of the program include a partnership between a CDC and a Bank, and that borrowers meet one of two economic development requirements to obtain a loan – either create and retain jobs, or meet a public policy or community development goal.

Certified Development Company (CDC): Building Local Communities

A CDC is a non-profit small business lender that is certified by, but independent of, the SBA. CDCs have been in existence for over 60 years with a mission to foster economic development. They are committed to helping small businesses access capital, build local communities, and create and retain jobs. There are approximately 200 CDCs across the nation and each serves a particular region. All CDCs deliver 504 loans and many provide additional products from federal, state and local programs. Unique to CDCs, these non-profits also invest their own dollars into local economic development initiatives to drive even greater impact.

Meeting the Needs of Small Businesses

• Preserve cash with low down payment of only 10% - conventional loans are 20-30%. This allows businesses to hire more people and manage cash flow for growth-related business costs.

• Long repayment terms of 25, 20 and 10 years, which reduces the monthly payment, making the loan affordable for businesses.

• Below market fixed rate provides a set occupancy cost, which helps the business owner more accurately plan for the future.

A Successful Public Private Partnership

Competitive National Economy

SBA and its programs were created with the understanding that a strong small business sector is integral to a competitive national economy. Today, and in the future, the CDC lending industry is leading awareness of, and expansion of access to, the 504 Loan Program, knowing the resulting economic development is foundational to a thriving economy.

Who knew? SBA 504 loans are like a box of chocolates - you can keep coming back for more!

This flexibility allows businesses to continue expanding, upgrading equipment, or purchasing additional commercial real estate as needed. The SBA 504 loan program provides long-term, fixed-rate financing with lower down payments, making it an attractive option for small business owners. By leveraging this financial tool, businesses can more effectively manage cash flow while investing in growth opportunities.

Whether you're looking to renovate your current facility, buy new machinery, or acquire additional property, the SBA 504 loan program offers a viable solution to support your business's ongoing success and development.

Contact Small Business Capital Corporation to learn more!

Streamlining the SBA 504 Loan Process

Navigating the SBA 504 loan process can be straightforward if you know the key steps. Here’s a quick guide to help you through:

1. Eligibility Check: Determine if your business qualifies for an SBA 504 loan. Generally, your business must operate for profit, meet the SBA size standards, and have a tangible net worth of less than $20 million and an average net income of less than $6.5 million after federal income taxes for the preceding two years.

2. Find a CDC: Certified Development Companies (CDCs) are non-profit organizations that work with the SBA and private-sector lenders to provide financing. Locate a CDC in your area. Small Business Capital Corporation (SBCC) is the premier CDC in Oklahoma to assist with your application.

3. Pre-Application and Initial Consultation: Schedule a meeting with SBCC to discuss your project and confirm it fits within program guidelines. SBCC will guide you through the required documentation and information for the application.

4. Application Submission: Prepare and submit the necessary application forms and supporting documents to SBCC. This typically includes a business plan, financial statements, and project details.

5. Credit Review and Approval: SBCC will review your application and submit it to the SBA for approval, involving a thorough credit analysis to ensure the loan meets SBA requirements.

6. Approval and Commitment Letter: If approved, you will receive a document outlining the loan terms and conditions. This document will also specify any additional information or documentation needed before closing.

7. Closing and Funding: Once all requirements are met and documentation is complete, the loan will close, and funds will be distributed.

By following these steps, you can streamline the SBA 504 loan process and secure the needed funding to grow your business.