In a word: Small Businesses.
"Small business” is defined as a business with a tangible net worth of $15 million or less (including affiliates) and average net profit after tax cannot exceed $5.0 million (average last two years). Business owners must be a U.S. citizen or resident alien.
- Not-for-profit businesses.
- Businesses engaged in any illegal activity.
- Businesses deriving more than one-third of gross annual revenue from legal gambling activities.
- Businesses primarily engaged in the business of lending (banks, finance companies, investment companies, life insurance companies).
- Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds.
- Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting.
What are the Permitted Uses of 504 Loan Proceeds?
- Acquisition of vacant land for construction of a building
- Acquisition of land and building
- Construction of a building
- Renovation of building; addition to building
- Acquisition of a commercial vessel
- Acquisition of heavy duty machinery & equipment
- Associated soft costs: title searches & insurance; attorneys fees; appraisals; environmental reports; architects; permits;surveys; installation of machinery; points on bridge loans, small amount of furniture and fixtures, etc.
- Not permitted are mortgage broker fees; points on permanent financing
- Refinancing is only permitted in certain circumstances.