Who is Eligible?
- Must be a for-profit business. Generally available to individual business owners or multiple owners partnering on a project
- The business and any affiliate companies must have a net worth no greater than $15 million.
- The average net profit of the business cannot be more than $5 million in average after taxes in the last two years.
- The business must create and/or retain jobs and/or meet one of the following SBA Public Policy goals:
- Expansion of an export business (at least 10% of last years sales must be from export sales).
- Expansion of a minority owned business (at least 51% ethnic minority interest).
- Women owned.
- Veteran owned.
- Other SBA-approved public policy goals.
What are the occupancy requirements for the business?
- 51% if acquiring an existing facility (49% can be permanently leased out).
- 60% for a new construction project with the potential that the business will occupy some additional space within three years, and a total of 80% within ten years. The balance of the building (20%) can be permanently leased out.
How much of an Equity contribution is required for an SBA 504 Loan?
- Commonly 10%· If the entity is considered a new business or the property is determined to be a Special Purpose Property, an additional 5% equity is required.
Types of Businesses Served by PYMES:
- Medical Doctors Practices
- Auto repair shops
- Attorneys Practices
- Car washes
- Childcare centers
- Dental offices
- Distribution centers
- Hair salons
- Hotels and Small Inns
- IT companies
- Pharmaceutical Companies
- Restaurants and food service companies
- Retail and wholesale companies
- Veterinary offices
Are there any pre-payment penalties?
The SBA 504 Debenture has a re-purchase premium (RP) during the first ten years of the 20-year Debenture period.
This is a declining premium (10/9/8/7/6/5/4/3/2/1) that is calculated based on the year of the loan, remaining balance (B) and interest rate (I).
For example, if a Debenture is repurchased in year 5, the repurchase premium would be as follows: RP = B(I x .60). A 10-year Debenture has a re-purchase premium during the first five years (10/8/6/2).
Past Interest Rates
Amount of Debentures
Spread Over Treasury Rate