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Small businesses interested in a Small Business Administration (SBA) loans may choose to pursue a 504 loan.s. 504 loans can be for much higher amounts than 7(a) loans. A 504 loan is used to purchase owner occupied real estate and other fixed assets, such as equipment, furniture and fixtures etc.
So, how much can a small business borrow with a 504 loan program?
504 loans can reach over $20 million. If you have big plans for your small business and need a large loan, an SBA 504 loan could be the right choice.
At Business Funding Group LLC (BFG), we help you get the loan you need so you can focus on growing your business. Our knowledgeable team has a track record of successfully securing loans of $20M+ for businesses like yours.
Funding Structure of the 504 Loan
An SBA 504 loan funding structure is divided into three:
- A bank lender provides 50% of the funding
- A Certified Development Companies (CDC) funds 40%
- The business owner provides the remaining 10%
Repayment terms vary for the different parts of the 504 loan.
For example, if a small business secured a loan for $10M, the conventional owner-occupied loan would fund $5M, the CDC would provide $4M, and the business would contribute the remaining $1M.
Because the SBA guarantees up to half of the loan amount through a CDC and the funding is provided by multiple parties, lenders face less risk. This allows the SBA to provide high loan amounts for businesses to expand.
SBA 504 Loan Funding Usage
Businesses can utilize 504 loans for:
- Purchasing real estate
- Purchasing equipment and other long-term assets
Securing a 504 Loan
Whether a business is seeking a maximum loan amount or something smaller, the lender wants to know that you can afford and will repay the loan. . To determine this, lenders primarily look at cash flow and the business owner’s credit.
Depending on the type of asset the loan will be used for, a building and/or equipment, the lender also considers a down payment, business equity, or other collateral when determining the terms of the loan.
Businesses must:
- Be for-profit
- Located in the U.S. and owned by an american citizen(s) or green card holder
- Meet size guidelines
- Occupy 51% of the building they are buying
Determining your eligibility for a 504 loan can begin with a call to BFG.
Call Us to Discuss SBA 504 Loan Amounts for Your Business
Small business owners considering pursuing an SBA 504 loan may wonder how much they could borrow. The 504 loan can provide significant financing of over $20 million to invest in fixed assets like real estate, equipment, and other long-term assets.
If you are ready to see how an SBA 504 loan could drive your business’s expansion, call BFG to determine your eligibility and discuss potential loan amounts.