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SBA Loan Basics
What is an SBA 504 Loan? PDF Print E-mail

SBA loan must provide US jobsThe United States Government formed the Small Business Administration (SBA) in 1953 to help businesses get established and grow. The SBA 504 Loan Program is an economic development program that offers small businesses another way to get business financing, while promoting business growth and job creation. As of February 15, 2012, the SBA 504 Loan Program has provided $50 billion to help small business owners while creating over 2 million jobs.

 

The SBA 504 loan program is a partnership that includes the SBA, the borrower, and the lender; each of these "partners" provides a portion of the financing. Up to 40% of the total project cost is provided through one of the SBA’s Certified Development Companies (CDC’s), funded through an SBA-guaranteed debenture. Up to 50% is provided by the commercial lender through World Net Capital I. The borrower has to contribute at least 10% of the project cost. The commercial lender’s portion of the loan does not carry the same benefits as the 504 loan program. The lender determines the interest rate and term of it's 50% portion, and it does not come with the federal guarantee.

Last Updated on Thursday, 12 September 2013 14:46
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SBA Loan Requirements PDF Print E-mail

US citizen ownership requiredA borrower for an SBA 504 loan may be a cooperative organization, corporation, partnership, or other legal entity organized in the United States. Furthermore, the borrower also may be an Indian tribe on a Federal or State reservation or other federally recognized tribal group, a public body, or an individual. The borrower must be engaged in or proposes to engage in a business that will: 1) provide employment; 2) improve the economic or environmental climate; 3) promote the conservation, development, and use of water for aquaculture; or 4) reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems. Individual borrowers must be citizens of the United States (U.S.) or reside in the U.S. after being legally admitted for permanent residence. Corporations or other nonpublic organizations must be at least 51 percent owned by persons who are either citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence.

Last Updated on Wednesday, 11 September 2013 16:33
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