A Powerful Financing Tool
The U.S. Small Business Administration (SBA) 504 loan program provides small and medium-size businesses with long-term, low, fixed-rate financing for owner-occupied commercial real estate and heavy machinery projects. The inspiration behind the SBA 504 loan is to promote business investment and job creation by providing access to low down payment financing, so that small businesses can preserve cash to operate their business.
How does the SBA 504 Loan work?
The SBA 504 loan packages two loans together, one from HCDC and one from a private lending partner, such as a commercial bank or credit union. The structure of the loan is typically 50/40/10.
The lending partner makes a commercial loan typically 50% of the total project costs and holds a first mortgage.
HCDC provides a subordinated, fixed-interest rate, long-term loan for up to 40% of project cost up to $5 million ($5.5 million in special cases).
The borrower typically provides an equity injection of as little as 10% of the project cost.
SBA 504 Loan Example – $1 Million Project
|Totals||100%||$ 1 Million|
Immediate and Long-Term Benefits for Small Businesses:
Benefits for Lenders:
Who Is Eligible for the 504 Loan Program?
What Is Eligible for the 504 Loan Program?
- Financing for land acquisition.
- Financing for building acquisition or construction.
- Financing for renovation or expansion.
- Financing for machinery and equipment with a useful life of 10 years or more.
- “Soft” costs for appraisals, general surveying, architectural work and installation.
Applicants Involved in the Following are Ineligible:
- Speculative lending or investments.
- Non-profit institutions.
- Rental property held primarily for sale or investment.
- Businesses appealing to sexual nature or prurient interests.
HCDC: The SBA Loan Resource
For over 30 years, HCDC has partnered with area private lenders to provide SBA loans to help businesses gain access to stable, long-term financing. Since 1982, HCDC has approved over $1 billion to area companies and helped finance the job creation of nearly 10,000 new jobs. HCDC is one of the largest non-bank SBA loan providers in Ohio, Kentucky and Southeast Indiana. Want more information? Contact us: