The 504 Loan Program is a U.S. Small Business Administration (SBA) funded program that provides financing to small and mid-sized businesses for the purchase of equipment and commercial real estate. The SBA loan is administered by a Certified Development Company (CDC) such as BLP in partnership with a commercial bank or credit union lender. Learn More
A Certified Development Company (CDC) is an entity that processes U.S. Small Business Administration (SBA) 504 loans in partnership with Bank, state and/or private money creating a financial assistance package for businesses with funding needs for real estate and equipment. The SBA takes a second lien on the property or equipment financed at a maximum participation level of 40% of the total funding needs. SBA certifies corporations to be CDC’s and authorizing them to process SBA 504 loans.
When your loans close and your SBA 504 loan is funded, you’ll incur various fees totaling approximately 2-3% of the SBA loan amount, plus an attorney closing fee of $2,500. These fees are financed within the SBA loan proceeds, so they are not out-of-pocket expenses. BLP will collect a deposit for a portion of these fees only after approval is received from SBA. There are no application fees.
SBA will take a subordinate collateral position behind the primary lender. Generally, collateral will include only the assets being purchased with SBA loan funds. The 504 program does not require additional collateral as required within the 7(a) program such as personal assets of owners.
Compared to conventional commercial financing, the SBA 504 program helps borrowers reduce their down payment and fix the interest rate on a portion of the financing for up to 25 years at a rate that is typically below-market. For lenders, risk is reduced as the primary lender will typically lend 50% of the cost while SBA bears most of the collateral risk with a subordinate lien position. More Benefits
To be eligible for the SBA 504 program, each business must meet the following criteria:
Our loan calculator is for illustrative purposes only and accuracy is not guaranteed. The default figures shown are hypothetical and may not be applicable to your individual situation. Be sure to consult a BLP financial professional prior to relying on the results.
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Applying for an SBA 504 loan is comparable to applying for any business loan but with many more benefits. Begin by contacting one of our BLP staff members, and we will come to your place of business to further explain the program details. We provide a checklist of what is needed to simplify the process. We will work with your accountant and lender, and do all of the analysis, packaging, and communication with the SBA for you. Our goal is to simplify the process as much as possible for our borrowers.
Our Servicing staff is here to help and answer all your question, contact Servicing for assistance.
If you already have a loan number and it is associated with your SSN, you may create a CAFS Borrower account as follows: (Commercial accounts are not allowed and any and all information needs to be obtained from the servicing center listed on your statement), for more information visit: https://caweb.sba.gov/
Yes, newly established companies would need to provide a written business plan with financial
projections.” The financing structure also changes in that SBA requires an additional 5% cash equity injection from the borrower reducing SBA’s participation level in that project.
Yes! For existing commercial real estate properties, the borrowing company must occupy at least 51% of the leasable area and the remainder can be leased to third parties. For new construction buildings, the borrowing company must occupy 60% of the leasable area immediately with plans to occupy 80% over time.
Yes, the down payment can also be in the form of:
Generally, the 504 program will make sense for projects with a total cost of greater than $400,000. All borrowers are eligible for up to $5 million in aggregate SBA financing through the SBA 504 & 7(a) programs. Projects involving small manufacturing firms and green-energy generation are eligible for up to $5.5 million on each project.
In order to finance and assist with the growth and development of businesses throughout the State of Wisconsin, BLP staff provides access to the SBA 504 loan program and other resources using our expertise, knowledge, and partnerships.
BLP is committed to business growth and community development by providing alternative financing options for: