SBA 504 Loan
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PROGRAM DESCRIPTION
The Small Business Administration 504 Loan Program provides for up to 40% of the total cost of a project for a term of up to twenty years at a fixed, below-market interest rate.
The 504 Program is generally for established small businesses but start-up businesses may qualify. The program provides fixed asset financing for land and building purchases, new construction, long-term leasehold improvements and capital equipment purchases. Working capital and real estate speculation are not allowed under this program. Major expansions may sometimes include a small amount of debt refinancing. The SBA 504 portion ranges from $50,000 to $4,000,000, depending upon business type.
The Small Business Administration (SBA), in cooperation with Panhandle Area Council (PAC), provides assistance in completing the 504 loan package.
FINANCING TERMS
A bank or another private lending institution and the PAC/SBA are the two lenders in this program with the bank lending 50% of the project total. Their rate and fees must be consistent with market levels. The private lender's collateral consists of a first lien position on assets.
PAC/SBA is the subordinate lender that lends a maximum of 40% of the project, up to $1,500,000 for any regular business, $2,000,000 for any public policy loans, and $4,000,000 for manufacturing loans (this applies to NAICS sectors 31, 32, and 33 only). PAC sells a debenture guaranteed by the SBA. The term of the loan is 10 years on equipment and 20 years on real estate. The borrower's capital injection requirement is a minimum 10-20% of the project total.
ELIGIBILITY REQUIREMENTS FOR SBA 504 GUARANTEED DEBENTURES
ELIGIBLE PROJECTS/COSTS
INELIGIBLE PROJECTS
COLLATERAL
Usually the mortgage or Deed of Trust on land and buildings being financed, liens on machinery, equipment and fixtures, lease assignments, personal assets and personal guarantees will serve as collateral.
FINANCING COSTS
A Processing Fee of 1.5%, Escrow Fees, Legal Fees, Title Insurance, Recording and Filing Fees may be applicable.
PRE-APPLICATION INFORMATION
Panhandle Area Council, Inc. does not discriminate by reason of race, color, religion, sex, marital status, disability, age, or national origin in services or accommodations offered or provided to our loan clients and potential loan clients. PAC is an equal opportunity provider.
The Small Business Administration 504 Loan Program provides for up to 40% of the total cost of a project for a term of up to twenty years at a fixed, below-market interest rate.
The 504 Program is generally for established small businesses but start-up businesses may qualify. The program provides fixed asset financing for land and building purchases, new construction, long-term leasehold improvements and capital equipment purchases. Working capital and real estate speculation are not allowed under this program. Major expansions may sometimes include a small amount of debt refinancing. The SBA 504 portion ranges from $50,000 to $4,000,000, depending upon business type.
The Small Business Administration (SBA), in cooperation with Panhandle Area Council (PAC), provides assistance in completing the 504 loan package.
FINANCING TERMS
A bank or another private lending institution and the PAC/SBA are the two lenders in this program with the bank lending 50% of the project total. Their rate and fees must be consistent with market levels. The private lender's collateral consists of a first lien position on assets.
PAC/SBA is the subordinate lender that lends a maximum of 40% of the project, up to $1,500,000 for any regular business, $2,000,000 for any public policy loans, and $4,000,000 for manufacturing loans (this applies to NAICS sectors 31, 32, and 33 only). PAC sells a debenture guaranteed by the SBA. The term of the loan is 10 years on equipment and 20 years on real estate. The borrower's capital injection requirement is a minimum 10-20% of the project total.
ELIGIBILITY REQUIREMENTS FOR SBA 504 GUARANTEED DEBENTURES
- Must create/retain approximately 1 job for each $65,000 of SBA financing.
- Must be small business seeking to purchase fixed assets or expand.
- Must be a for-profit business with a net worth of less than $8,500,000 and net earnings of less than $3,000,000 (after taxes) on average the last two years.
ELIGIBLE PROJECTS/COSTS
- Projects must be located within Idaho.
- Land and/or building purchases.
- New building construction and/or building renovation.
- Machinery and capital equipment purchases.
- Leasehold improvements.
- New business acquisition.
- Some Soft costs such as interim interest, appraisal fees, etc.
INELIGIBLE PROJECTS
- NOT for non-profit organizations, lending institutions, gambling facilities, real estate speculation and private recreation facilities.
COLLATERAL
Usually the mortgage or Deed of Trust on land and buildings being financed, liens on machinery, equipment and fixtures, lease assignments, personal assets and personal guarantees will serve as collateral.
FINANCING COSTS
A Processing Fee of 1.5%, Escrow Fees, Legal Fees, Title Insurance, Recording and Filing Fees may be applicable.
PRE-APPLICATION INFORMATION
- Current personal financial statements and tax returns (3 years) for all principals.
- Company historical financial statements and tax returns (3 years), to include balance sheet and profit and loss statements.
- Resumes od principals.
- Short Description of business.
- Business Plan.
- Two year projected balance sheet and profit and loss statement.
- Itemization of project costs:
- Land-Site Improvement
- New Construction
- Renovation
- Equipment
Panhandle Area Council, Inc. does not discriminate by reason of race, color, religion, sex, marital status, disability, age, or national origin in services or accommodations offered or provided to our loan clients and potential loan clients. PAC is an equal opportunity provider.
