Coronavirus (COVID-19): Relief options and Additional Resources, U.S. Small Business Administration   |   409 3rd St, SW. Washington DC 20416. The U.S. Small Business Administration 's SBA 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, … A Certified Development … Loans of $ 1 million or less will of course be small business loans and considered under the lending test in a CRA … Details of this time-limited program include:  504 Loan provides fixed-rate, long-term financing for up to 20 years. The 504 Program provides growing businesses with long-term, fixed-rate financing for owner-occupied real estate and heavy equipment. Generally, the project assets being financed are used as collateral. The 504 Loan will be funded by a debenture issued by CDC and guaranteed by the U.S. Small Business Administration (SBA). While there is no maximum project size, the maximum SBA loan amount (debenture) is $5 million.  Small manufacturers or specific types of energy projects (as described in the energy project section) may qualify for a $5.5 million debenture.  Small manufacturers must create or retain a ratio of one job for every $100,000.  As an alternative to job creation or retention, your business may qualify if it meets a community development or public policy goal as long as the CDC maintains its portfolio job average requirements.  These include:Â. The refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment*. The SBA 504 loan encourages local economic development It helps to create and retain jobs With the LOWEST DEFAULT AND LOSS RATE of any of the SBA’s financing programs, this loan program is ideal for banks and borrowers There is, of course, a lot more to learn about this powerful loan program. This fact sheet highlights the SBA’s Certified Development Company/504 Loan Program (504 loan program). The SBA 504 loan program is a financing tool, designed to encourage economic development within a community. The 504 Loan Program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization.  504 loans are made available through Certified Development Companies (CDCs), SBA's community based partners for providing 504 Loans. Community Advantage loans, which are set to expire in 2022, are a lending program established by the SBA to help encourage lending in traditionally underserved communities. Interest rates on 504 Loans are correlated with  the current market rate for 5-year and 10-year U.S. Treasury issues. An SBA 504 loan is a low down-payment, fixed interest rate, long-term loan to provide financing for fixed assets such as land, buildings, machinery, and equipment. The SBA -backed portion of the 504 loan will be a second mortgage, financing up to 40 percent of eligible project costs. Plan, equipment and process upgrades or renewable energy sources such as the small-scale production of energy for individual buildings or communities consumption, commonly known as micropower, or renewable fuels producers including biodiesel and ethanol producers. For additional information on eligibility criteria and loan application requirements, small business and lenders are encouraged to contact a Certified Development Company in their area. Not sure where to start? To contact a CDC in your area, first use this link to locate your local SBA District Office. Eligible Uses. Loan maturities of 10 and 20 years are available. The 504 Program provides small businesses requiring “brick and mortar” financing with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. Start your business in 10 steps. The SBA 504 Loan has three components: 1) direct commercial loan from the private sector covering 50 percent of the project, and secured by a senior lien. Obtaining CRA Credits with SBA 504 Loans In general, loans that don’t fall under the “conventional small business lending” category may be considered as community development loans. The SBA 504 Loan program represents permanent financing and is an economic development program utilizing job creation. The CDC/504 loan program is a long-term financing tool for economic development within a community. Under the 504 Loan Program, loans are made in conjunction with private-sector lenders to small businesses by CDCs, which are certified and regulated by the SBA to promote economic development within their community. CDCs are certified and regulated by the SBA, and work with SBA and participating lenders (typically banks) to provide financing to small businesses, which in turn, accomplishes the goal of community economic development. Learn more here. 2) a loan secured with a junior lien from a CDC (like us at BFC) covering up to 40 percent of the cost, and backed by a 100 percent SBA-guaranteed debenture. 504 loans … One of the conditions for the 504 Loan is that Interim Lender executes this Interim Lender Certification. Private sector lenders, CDCs, and the SBA … Community Development Resources lends to start-up and existing businesses that have a viable business plan to create or maintain business. The 504 Loan Program is an SBA business loan program authorized under Title V of the Small Business Investment Act of 1958, 15 U.S.C. 504 Loans are typically structured with SBA providing 40% of the total project costs, a participating lender covering up to 50% of the total project costs, and the borrower contributing10% of the project costs. Under the 504 Program, a business qualifies if it has a tangible net worth not more than $15 million, and an average net income of $5 million or less after federal income taxes for the preceding two years prior to application. The debt refinancing must not involve expansion of the small business (however, this may be eligible under the regular 504 loan program). Longer loan amortizations, no balloon payments; Savings that result in improved cash flow for small businesses. Improving, diversifying or stabilizing the local economy; Assisting manufacturing firms (North American Industry Classification System (NAICS), Sectors 31 to 33) and all of its production facilities located in the United States; or. Fees may be financed with the loan. The SBA 504 Loan program is a direct SBA lending program designed to provide long-term, below-market, fixed asset financing to small, for-profit businesses. The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation. The 504 Program provides small businesses requiring “brick and mortar” financing with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. For additional information on eligibility criteria and loan application requirements, please contact your local Certified Development Company (CDC). Keep in mind that the 504 loan is specifically designed to … CDC has agreed to make a loan (the 504 Loan) to Borrower and Co-Borrower, if any (Borrower) for purposes of financing the Project described in the “Authorization for Debenture Guarantee (SBA 504 Loan),” as amended (the Authorization). Due to changes made to the Small Business Jobs Act in the fall of 2011, small business owners now have a new loan refinancing option.   Changes were approved to the Small Business Jobs and Credit Act, allowing small business owners to use 504 Loans to refinance up to 90% of the appraised value of available collateral (existing commercial mortgages). Reduction of energy consumption by at least 10 percent; Increased use of sustainable design, including designate that reduce the use of greenhouse gas emitting fossil fuels, or low-impact design to produce buildings that reduce the use of non-renewable resources and minimize environmental impact, or. As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs. A Certified Development Company (CDC) is a private, nonprofit corporation set up to contribute to the economic development of its community. The 504 loans are made available through Certified Development Companies (CDCs), SBA's community-based partners for providing 504 Loans. Temporary 504 Loan Refinancing Program – Small Business Jobs Act. With down payments as low as 10% and long-term fixed rates, an SBA 504 loan makes funding attainable so your business can continue to grow without missing a beat. This progr For questions about the 504 Loan Program, please contact your local SBA District office. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs. About the U.S. Small Business … Revised OCA Regulations on 504 and 7(a) Loan Program. trucks) or refinancing of … Existing SBA 504 loans, SBA guaranteed loans, and other government-guaranteed loans are not eligible to be refinanced. Not sure where to start? One provided by an SBA Preferred Lending Partner and another by an SBA Community Development Corporation (CDC). The 504 loan consists of a conventional first mortgage, typically for 50 percent of the project cost, from a third-party lender.  An example of how a typical 504 loan is structured follows: Total 504 projects costs for a $1,000,000 project may include the following (eligibility requirements apply to the 504 portion of the project as well as the participating lending  portion): The use of proceeds from 504 Loans must be used for fixed assets (and certain soft costs), including: *Note: The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing (except for projects with an expansion component or that meet the temporary refinancing provisions of the Small Business Jobs Act of 2010).  See also “Program Updates” at the bottom of the web page.  As this program is time-limited, it’s important to act now if you are looking to refinance! Â. Current Appraised Value of Property              $1,400,000, Outstanding Debt                                               $1,000,000  Â, 90% LTV                                                               $1,260,000, Borrower contribution (equity)                             $140,000                 Â, Working capital (from loan proceeds)               $260,000. about CDC Checklist for Submitting Real Estate Appraisal, about Supplemental Information for PCLP Processing, about PCLP Quarterly Loan Loss Reserve Report, Women-Owned Small Business Federal Contracting program, Service-Disabled Veteran-Owned Small Business Concern program, Natural Resource Sales Assistance program, Commercial market representative directory, Procurement center representative directory, National Resource Guides (English/Spanish). This program and the 7(a) Loan Program are two of the SBA’s flagship efforts to expand access to capital. An SBA 504 loan is a 10-percent down, fixed-rate, ... SBA 504 loan provided by Black Hills Community Econ. Supplemental Information for PCLP Processing, Coronavirus (COVID-19): Relief options and Additional Resources, U.S. Small Business Administration   |   409 3rd St, SW. Washington DC 20416. CERTIFIED DEVELOPMENT COMPANY (504) LOAN PROGRAM The CDC/504 loan program is a long-term financing tool for economic development within a community. This program and the 7(a) Loan Program are two of the SBA’s flagship efforts to expand access to capital for small businesses. As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs. This program is a proven success and win-win-win for the small business, the community … These apply to you (the borrower), but also to lenders, and even the project you’re about to embark on. Purchase land and … Together, they encourage banks and other lenders to help small businesses and entrepreneurs start and grow their … SBA 504 loans qualify for community development consideration (depending upon the size of the loan as explained below) because the loans promote economic development and create and retain jobs. SBA 504 Loan Requirements for Borrowers, Projects, Lenders, and More While they are not as stringent as some other types of loans, you will find a wide range of eligibility requirements when it comes to the 504 loan program. Start your business in 10 steps. The SBA 504 guaranteed loan program to purchase commercial real estate is comprised of two loans. The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping; The construction of new facilities or modernizing, renovating or converting existing facilities; The purchase of long-term machinery* ; or. The CDC/504 loan program is a long-term financing tool for economic development within a community. A Certified Development Company (CDC) is a nonprofit corporation that promotes economic development within its community through 504 Loans. A CDC is a nonprofit corporation whose mission is to contribute to the economic development of its community. For more information, see What We Do. This program can help businesses get … The remaining 10 percent will be your small business owner contribution.  Â, There are over 260 CDCs nationwide each having a defined Area of Operations covering a specific geographic area. Women-Owned Small Business Federal Contracting program, Service-Disabled Veteran-Owned Small Business Concern program, Natural Resource Sales Assistance program, Commercial market representative directory, Procurement center representative directory, SBA Revises OCA Regulations on 504 and 7(a) Loan Program, Service-Disabled Veteran-Owned Small Business Concerns (SDVOSBC), Small Business Owner Receives 504 Loan, Moves into Larger Facility, Small Business Owner Receives 504 Loan to Re-build Business, Small Business Owner Receives 504 Loan, Purchases Office and Warehouse Space, Small Business Achieves Growth with 504 Loan, Small Business Owner Expands with 504 Loan, Adding Jobs, National Resource Guides (English/Spanish), $500,000, 1st lien with bank (loan obtained from a private sector lender covering up to 50% of the total project cost), $400,000, 2nd lien with 504 loan, 20 year, fixed rate  (loan obtained through a CDC, funded through an SBA-guaranteed debenture, covering up to 40% of the total project cost), $100,000, borrower contribution (contribution from the borrower of at least 10% of the total project cost/). Development, Inc., Rapid City, SD. The 504 Loan program offers small businesses both immediate and long-term benefits, so business owners can focus on growing their business.  Some of the top-level benefits include: To be eligible for a 504 Loan, your business must be operated for profit and fall within the size standards set by the SBA. community development activities. • borrowers to finance environmental cleanup or redevelopment of an industrial site as part of an effort to revitalize the LMI community in which the property is located. As the SBA’s flagship loan program, CDC/SBA 504 loans are made available through Certified Development Companies (CDCs)—that is, nonprofit corporations that promote economic development within their communities—and are guaranteed by the SBA. ** Generally, a business must create or retain one job for every $65,000 guaranteed by the SBA. This fact sheet highlights the SBA’s Certified Development Company/504 Loan Program (504 loan program). As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs. The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation. A 504 loan provides small businesses with long-term, fixed-rate financing to acquire fixed assets for purchase, construction, expansion, or modernization. Personal guaranties from owners of 20% or more are also required. The SBA 504 Loan has three components: 1) Direct commercial loan from the private sector covering 50 percent of the project, and secured by a senior lien. • businesses, in an amount greater than $1 million, when made as part of the SBA’s Certified Development Company/504 Loan … The SBA 504 loan program focuses on providing financing that leads to community development. The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation.   The area of operation for most CDCs is the state in which they are incorporated. SBA 504 Loan Program. Black Hills Community Economic Development operates as a Certified Development … Most traditional business loans require a 20% down payment and interest rates that aren’t always feasible for a small to medium-sized business. SBA Revises OCA Regulations on 504 and 7(a) Loan Program to Expand Access to Loan Programs, Streamline the Application Process and Ensure Program Integrity through Enhanced Oversight. For more information click here. Assisting businesses in Labor Surplus Areas; Revitalizing a business district of a community with a written revitalization or redevelopment plan; Expanding small businesses owned and controlled by women; Expanding small businesses owned and controlled by veterans (especially service-disabled veterans); Increasing productivity and competitiveness (retooling, robotics, modernization, competition with imports); Assisting businesses in or moving to areas affected by Federal budget reductions, including base closings, either because of the loss of Federal contracts or the reduction in revenues in the area due to a decreased Federal presence; or; Reduction of rates of unemployment in Labor Surplus Areas determined by the Secretary of Labor; or. Loans and investments can get credit under the economic development category if they meet both a “size” and “purpose” test.  As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs.  This program is a proven success and win-win-win for the small business, the community and participating lenders. Community Development Resources is a Community Development Company (CDC) and has an active SBA 504 Loan Guaranty program for existing … Substantially all (85%) of the proceeds of the original debt being refinanced must have been used for 504 eligible purposes (acquisitions, construction or improvement of long-term fixed assets) and the remaining (15% or less) must have been incurred for the benefit of the small business; The debt to be refinanced must be secured by eligible fixed assets; The project also may include using available equity to pay eligible business expenses; The small business must have been in operation for two years or more (no start-ups); and. CDCs work with SBA and private sector lenders to provide financing to small businesses.

, CDC Checklist for Submitting Real Estate Appraisal. Public Benefit Requirements To be eligible for a loan through the 504 loan program, small business projects must either create or retain jobs, meet one of 15 community development or public policy goals,12 or meet one of the Energy Public Policy goals.13 The SBA … As Karen Mills, SBA Administrator commented, “The economic downturn of recent years and the declining value of real estate have had a significant, negative impact on many small businesses with mortgages maturing within the next few years.  As a result, even small businesses that are performing well and making their payments on time could face foreclosure because of the difficulties they face in refinancing and restructuring their mortgage debt.  This temporary program is another tool SBA can provide to help these small businesses remain viable and protect jobs.”, This program is authorized to provide $7.5 billion in financing and is available until September 27, 2012. 2) A loan secured with a junior lien from a CDC (like us at BFC) covering up to 40 percent of the cost, and backed by a 100 percent SBA-guaranteed debenture. Consolidate existing debt (balloon and/or high interest rate loans), Lock in long-term, stable financing, reducing fluctuating expenses, Finance eligible business expenses, saving needed cash-flow, Protect jobs and hire additional staff, supporting the local community, Include closing costs in the transaction, eliminating cash-flow drain, The debt to be refinanced is a commercial loan which was incurred not less than 2 years prior to the date of application, including any prior refinancing of the debt;Â. The SBA explains it this way: “The SBA 504 loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation … The 504 loan program provides small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. This temporary 504 Refinancing Program allows for small businesses to now use excess equity in fixed assets to obtain working capital that can be used for financing eligible business expenses (salaries, rent, utilities, inventory, pay off or down business line or credit or other business obligations).  This refinancing program affords the small business community money saving benefits, including: As with the 504 Loan, 504 Refinance Loans are processed by approved CDCs (Certified Development Company). To find a CDC near you, please check here. Loans cannot be made to businesses engaged in nonprofit, passive or speculative activities. The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation. It is one of the best financing options available to America’s small businesses. According to the SBA, “A Certified Development Company (CDC) is a nonprofit organization that promotes economic development within its community through 504 loans. Modernizing or upgrading facilities to meet health, safety, and environmental requirements; **Contact your CDC or local SBA District office for additional details.

Note Loan funds may not be used for working capital, mortgage broker fees, bridge loans during the construction period, business inventory, rolling stock (i.e.

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