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. 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. Start your business in 10 steps. 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 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.  As this program is time-limited, it’s important to act now if you are looking to refinance! Â. A 504 loan provides small businesses with long-term, fixed-rate financing to acquire fixed assets for purchase, construction, expansion, or modernization. Keep in mind that the 504 loan is specifically designed to … Eligible Uses. 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. These apply to you (the borrower), but also to lenders, and even the project you’re about to embark on. 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/). 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. 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. To contact a CDC in your area, first use this link to locate your local SBA District Office. 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. CDCs work with SBA and private sector lenders to provide financing to small businesses.

, CDC Checklist for Submitting Real Estate Appraisal. 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). The CDC/504 loan program is a long-term financing tool for economic development within a community. Not sure where to start? Start your business in 10 steps.

Temporary 504 Loan Refinancing Program – Small Business Jobs Act.  Â, There are over 260 CDCs nationwide each having a defined Area of Operations covering a specific geographic area. 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. Most traditional business loans require a 20% down payment and interest rates that aren’t always feasible for a small to medium-sized business. 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. 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. To find a CDC near you, please check here. 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. 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. The remaining 10 percent will be your small business owner contribution. Not sure where to start? 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. 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). 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. 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. For more information, see What We Do. Learn more here. According to the SBA, “A Certified Development Company (CDC) is a nonprofit organization that promotes economic development within its community through 504 loans. 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). Fees may be financed with the loan. 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. Longer loan amortizations, no balloon payments; Savings that result in improved cash flow for small businesses. 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. A Certified Development Company (CDC) is a nonprofit corporation that promotes economic development within its community through 504 Loans. The 504 Loan will be funded by a debenture issued by CDC and guaranteed by the U.S. Small Business Administration (SBA). One provided by an SBA Preferred Lending Partner and another by an SBA Community Development Corporation (CDC). community development activities.  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. 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. Existing SBA 504 loans, SBA guaranteed loans, and other government-guaranteed loans are not eligible to be refinanced. Revised OCA Regulations on 504 and 7(a) Loan Program. Details of this time-limited program include:  504 Loan provides fixed-rate, long-term financing for up to 20 years. One of the conditions for the 504 Loan is that Interim Lender executes this Interim Lender Certification. 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. The 504 Program provides growing businesses with long-term, fixed-rate financing for owner-occupied real estate and heavy equipment. ** Generally, a business must create or retain one job for every $65,000 guaranteed by the SBA. An SBA 504 loan is a 10-percent down, fixed-rate, ... SBA 504 loan provided by Black Hills Community Econ. 504 loans … 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. This program is a proven success and win-win-win for the small business, the community … 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. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs. The refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment*. 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. This program can help businesses get … 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. 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. Purchase land and … As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs. The SBA 504 loan program is a financing tool, designed to encourage economic development within a community. • 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. Black Hills Community Economic Development operates as a Certified Development … It is one of the best financing options available to America’s small businesses.  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 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 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. Loans cannot be made to businesses engaged in nonprofit, passive or speculative activities. Coronavirus (COVID-19): Relief options and Additional Resources, U.S. Small Business Administration   |   409 3rd St, SW. Washington DC 20416. The debt refinancing must not involve expansion of the small business (however, this may be eligible under the regular 504 loan program). SBA 504 Loan Program. 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. The 504 loans are made available through Certified Development Companies (CDCs), SBA's community-based partners for providing 504 Loans.

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