Who is Eligible?

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.

Eligible Businesses:

  • Organized as for-profit businesses.
  • Existing businesses (as well as some start up businesses) are eligible to obtain financing through the 504 Loan Program.
  • Business must have 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.

Ineligible Businesses:

  • 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.

   

 

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