PYMES Financial Partners

	GENERAL INFORMATION


	What is the SBA 504 Loan Program?

	The SBA 504 Loan Program is a long-term financing tool used to help stimulate economic development within a community. It is an alternative form of financing created to provide financing at a low cost for small and midsized businesses looking for expansion. SBA 504 Loans offer a fixed rate financing for the purchase or improvement of major fixed assets, such as land, buildings, and equipment.

	The Program is designed to enable small and midsized businesses to close such fixed-asset transactions with down payments as low as a 10% of the Total Project Cost and below-market interest rates. The SBA 504 Loan may also be used to construct a new facility or to purchase machinery and equipment that has a useful life of at least 10 years.


	Eligible SBA 504 Loan uses are:

	• Land and building purchases.

	• New construction or renovation.

	• Heavy machinery or equipment purchases and moving expenses.

	The SBA 504 Loan promotes business expansion and supports economic development in communities nationwide.


	A typical SBA 504 Loan Project includes:

	• A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost.

	• A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the project cost.

	• A contribution from the Borrower of at least 10 percent of the project cost (equity).This type of setup means that 100% of the project cost is covered either by contribution of equity by the Borrower or the Senior or Junior lien on the Project Property.

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