The SBA 504 Loan Program is designed to help small business owners acquire fixed assets – commercial real estate and/or long-life machinery and equipment – without the financial hassles and high cash outlay requirements often associated with conventional financing programs.

Loan Structure:

  • The key to the 504 loan program is its distributed credit structure: a commercial bank provides financing for 50% of the project and takes a first lien position; PADD provides up to 40% of the project financing (SBA portion) and takes a second lien position; and the small business owner provides a down payment of just 10% (depending on age of business and/or if the financed real estate is a special purpose structure, up to 20% equity are required)

Program Highlights:

  • Up to 90% commercial financing at below-market, fixed interest rates
  • Low down payment (usually 10%) preserves working capital
  • Long amortization terms (up to 20 years on real estate and 10 years on equipment)

Use of Proceeds:

  • Purchase, construction, expansion or renovation of commercial real estate and/or the acquisition and installation of long-life machinery and equipment
  • Green initiative projects (use of sustainable design; reduced energy consumption; renewable energy or fuels)
  • Purchase of furniture, fixtures and equipment
  • Associated fees and soft costs (attorney’s fees, architectural, engineering, surveys, etc.)
  • Debt refinancing

Borrower’s Injection:

  • 10% in most cases
  • 15% for start-up businesses (less than two years in operation) OR special-purpose properties and real estates
  • 20% if the project is a start-up AND special-purpose property
  • Equipment only loans may qualify with 10% or 15% injections

A Small Business Window to Wall Street:

Certified Development Companies like PADD fund all loans through the sale of bonds, thus giving the program the economics of scale to access public capital markets. Combined with the Small Business Administration (SBA) guaranty, the 504 Loan Program enables small businesses to access funding at the lowest possible cost.

For more information, please call 270.247.7171 or email us.