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SBA 504

As a successful small business owner, you help provide more job opportunities than any other sector of the economy. Yet, when you look for financing to meet your expansion needs, conventional sources are limited. Where can you turn for help? NEPA BFC fills this need by offering SBA’s 504 Loan Program.

With SBA 504, you get long-term, fixed-rate financing at a reasonable interest rate. The better news is that your equity in the project is typically limited to 10%. A 504 loan is for the purchase and use of long-term fixed assets such as land, buildings, or certain equipment. With low interest rates and an emphasis on job creation, the 504 Loan Program is truly the “Money That Makes America Work”.


Independently-owned, for profit-businesses that meet SBA 504 project requirements are eligible for financing. Generally, these are businesses that are ready to expand by purchasing fixed assets ranging from $250,000 to upwards of 15 million dollars.

Fixed assets can include real estate acquisition, new construction, renovation and expansion. Proceeds may also be used for land and site improvements such as parking lots, utility connections and landscaping. Other project costs that are directly attributable and essential to the project such as surveying, engineering, architectural fees, interim recording and title fees, points on interim financing, new and used machinery or equipment, and construction interest may also be financed. SBA has also approved a debt refinance program that operates with the same structure and regulations as the traditional program.


A typical 504 project has three sources of funding. Funds for the 504 portion of the project come from SBA Guaranteed Debentures issued by CDC’s, and are sold in the private bond market, typically around 40% of the total project cost. A private lender then provides financing amounting to 50% of the total project cost. The small business concern contributes as little as 10% of the total project costs.


Loan terms are comparable to the life of the asset that is being financed. Machinery and equipment terms are typically ten years; real estate terms are typically twenty and twenty-five years. Interest rates are fixed for the life of the loan, and are based on current market rates for five and ten-year U.S. Treasury Bond issues. A rate adjustment is added to the base rate to cover loan servicing and program subsidy costs. Rates are set at the time the project is funded.