Eligibility
Eligibility Guidelines:
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Organized as a for-profit business
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Legal entity - corporation, partnership, sole proprietor, or limited liability company
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Any type of legitimate business - manufacturing, wholesale, service, professional service or retail
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Located in or planning to locate in any area of the United States
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Small business - either: net worth under $20 million and net profits after taxes under $6.5 million or meet SBA's other size standards (by sales or number of employees depending on NAICS code)
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Planning to use the loan proceeds for capital investment - land, building, renovation, construction, machinery and associated soft costs. (The SBA 504 loan program is not a working capital program.) Call us for more details on what uses of loan proceeds can be included. In some cases, debt refinancing is eligible
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Another lender must be willing to participate in the financing. The SBA 504 loan finances up to 40% of the total project cost and the other lender finances 50%. The business or its owner typically puts in 10%
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Economic development goals must be achieved through the project being financed
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Owner must be user of the project being financed (51% occupancy if existing building; 60% occupancy if new construction)
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Two or more unrelated small businesses may receive a 504 loan to buy or construct a building as long as they, together, will occupy at least 51% of an existing building or 60% of new construction
Companies that are not eligible for SBA 504 loans are:
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Non-profit businesses
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Businesses engaged in lending (such as banks, finance companies)
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Passive holders of real estate and/or personal property
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Life insurance companies (however an insurance agency is eligible)
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Businesses located in a foreign country or owned by undocumented aliens
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Businesses selling through a pyramid plan
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Illegal businesses
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Businesses which restrict patronage
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Government owned entities (excluding Native American Tribes)
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Businesses engaged in promoting religion
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Businesses engaged in loan packaging
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Businesses owned by persons of poor character
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Equity interest by CDC or associates in applicant concern
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Businesses providing prurient sexual material
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Businesses that have previously defaulted on a Federal loan
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Businesses engaged in political or lobbying activities
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Speculative businesses
What are some of the Permitted Uses of 504 Loan Proceeds?
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Acquisition of land and building
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Acquisition of vacant land for construction of building
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Construction of building
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Renovation of building; addition to building
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Acquisition of heavy duty machinery and equipment
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Refinancing of qualified debt (with or without expansion)
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Associated soft costs: appraisal fees; environmental reports; closing costs; architects fees; permits; surveys; installation of machinery and equipment; points on interim loans; small amounts of furniture and fixtures; etc.