The SBA 504 Loan Program assists small business owners in the purchase of commercial real estate or equipment. It blends a bank loan with funds from the sale of government guaranteed bonds to create attractive financing for growing Nevada businesses. A typical financing structure is shown below.
The SBA Loan amount is limited to a maximum of 40% of cost or appraised value, whichever is lower, up to $1,500,000.
The 504 Loan amount can be increased, however, to $2,000,000 when supporting economic development goals.
The 504 Loan amount can be further increased to $4,000,000 for “small manufacturers” as defined by the SBA.
Single purpose buildings and start-up businesses are subject to additional equity injection.
The 504 Loan Terms
Maturity:
10 or 20 years. (The borrower selects the term).
Interest:
Fixed rate of interest for the life of the loan. Check
current rates, click here.
Security:
Second deed of trust on the property and personal guaranty of the owners.
Loans are assumable and carry a decreasing pre-payment penalty for the
first half of the loan term.
Bank Loan Terms
Maturity:
Must be at least ten years (or seven for equipment).
Interest:
To be negotiated with bank.
Security:
First deed of trust on property plus any other required by bank.
Benefits To The Small Business Owner
- 10% down payment--allows a business to conserve valuable operating capital.
- Below market fixed interest rate--stabilizes occupancy costs.
- Longer terms for repayment--results in lower loan payments.
- Ownership equity in real estate--creates possible investment and tax advantages.
- Collateral limited to asset financed--allows other assets to remain free of liens.
Assets Which Can Be Financed
- Existing buildings - Business must occupy at least 51% (may include remodeling or expansion).
- New construction - Business must occupy at least 60%.
- Machinery and equipment - Must have a useful life of at least ten years.
Eligible Companies
Existing businesses that meet SBA’s definition of a small business are eligible to apply for 504 loans. Start-up ventures with financially strong and/or experienced owners are also eligible.
Contact either
of our offices to find out more about the
SBA 504 Loan Program.
Loan
Program> Interest
Rates > Payment Calculator > For Bankers / Brokers > For Borrowers > Forms > For Exporters
> About NSDC > Success
Stories > FAQ's > Contact Us > Home
