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The 504 Loan Program provides growing businesses with long-term, fixed-rate financing for major fixed assets such as land, buildings, machinery and equipment. A typical 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from CMDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and an equity injection of at least 10 percent from the small business.
For most projects the maximum SBA debenture size is $5 million. Generally, a business must create or retain one job for every $75,000 provided by the SBA. For “Small Manufacturers” and “Energy Efficiency Projects” the debenture size increases to $5.5 million. Small manufacturers must create or retain one job for every $120,000 provided by the SBA.
Job creation goals are not required when a project meets a public policy goal. The public policy goals include:
A “Small Manufacturer” is defined as a small business concern that has:
An “Energy Efficiency Project” must:
Proceeds from 504 loans must be used for fixed asset projects such as:
Interest rates on 504 loans are set to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Maturities of 10, 20 and 25 years are available. See Current Interest Rates for SBA 504 Loans