SBA 504 Loans

Commercial Real Estate and Machinery and Equipment Financing

How it works

Loan Amount         
Total projects range from $300,000 (SEED’s minimum amount is $120,000) to $13 million or more (SEED’s maximum is $5.5 million for manufacturing businesses and $5 million for all others). On projects smaller than $300,000, SEED evaluates the benefits to the client, and may use its small loan programs.

Eligible Businesses
For-profit corporations, partnerships or proprietorships; industrial, commercial or service businesses with a tangible net worth not in excess of $15 million; less than $5 million average net profit after taxes during previous two years.  Examples include but are not limited to:

• Restaurants
• Office buildings or condos
• Manufacturing
• Hotels/motels
• Retail
• Medical offices
• Law Practice
• Heavy machinery & equipment

Eligible Projects

• Acquisition of land and buildings
• Construction and/or renovation
• Equipment and furnishings

Occupancy Requirement
Owner must occupy at least 51% of an existing building (for their business); 60% for new construction at day one and 80% within 10 years.

Personal Guarantees
Required for all owners of 20% or more of the operating company or real estate holding company.  Additional guarantees may be required for minority owners or affiliate businesses.

Job Requirement

• 1 job per $75,000 of SBA/SEED funds (over a period of two years)
• 1 job per $120,000 of SBA/SEED funds for small manufacturers (over a period of two years)

SBA 504 Debt Refinance (with or without expansion):
Now a permanent part of the SBA 504 Program:

• Traditional 504 Loan Program regulations apply
• Structured like SBA’s traditional 504 loan
• Business must be in operation for at least two years- with no changes to ownership during that period
• Debt to be refinanced must be a commercial loan incurred for the benefit of the small business concern not less than two years before the date of the 504 application
• Use of proceeds which were used to acquire a 504 eligible fixed assets (i.e. owner-occupied real estate, land, and equipment, etc.) and secured by 504 eligible fixed assets- loan to value maximum is 90%
• Loan to be refinanced must be current on all payments during the past 12 months
• Cash out allowed for eligible business expenses- contact us to discuss
• Ability to refinance government-guaranteed loans (including 504, 7A, and USDA)

SBA 504 Advantage

• Provides up to 90% financing (only 10% down) of the total project costs, which preserves your business’ working capital
• Below Market Interest Rates See current rates.
• Long term fixed rate- 20 or 25 years; 10 years on machinery and equipment
• Lower Real Estate Expenses - Owning commercial real estate instead of leasing can lower real estate expenses, and provide the added benefit of converting a large expense into a fixed cost that does not increase as rapidly.
• SBA fees for SEED’s 40% are rolled into the 504 loan.
• No Balloon Payments, Calls or Covenants
• Partnership with SEED and Lending Institution, allowing borrower to keep their existing bank relationship and streamline process
• Assumable Loans - Future sales of properties financed by our 504 loans are benefited by having assumable mortgages at low fixed interest rates.
• Cash out- within the debt refinance program