SBA 504 Loan

SBA 504 Loan 

The purpose of the program is to create and/or retain permanent jobs by providing fixed-asset financing to healthy small businesses expanding their facilities. The program provides a reasonable fixed-interest rate (published monthly), long repayment term, and a low down payment to small businesses for the achievement of economic growth in the designated area.

SBA Service Area

  • Georgia (All)
  • South Carolina (Beaufort, Hampton & Jasper Counties)
  • Florida (Duval, Nassau, St. Johns & Clay Counties)

Loan Structure

For existing businesses-“50/40/10”


Bank:        50%-1st lien

SBA:         40%-2nd lien

Borrower: 10% equity/down-payment

*For “start-ups” OR “single-purpose” facilities, an additional 5% injection is required.


Bank:        50%-1st lien

SBA:         35%-2nd lien

Borrower: 15% equity/down-payment

*For “start-ups” AND “single-purpose facilities”, an additional 10% injection is required.


Bank:        50% -1st lien

SBA:         30% -2nd lien

Borrower: 20% equity/down-payment

  • Maximum/Minimum Loan Amount

The maximum loan amount is $5,000,000 (SBA portion) and the minimum is $25,000 (SBA portion).

  • Maximum/Minimum Loan Amount

The maximum loan amount is $5,000,000 (SBA portion) and the minimum is $25,000 (SBA portion).


The interest rate for the bank’s loan is determined by the bank.

The interest rate on the (SBA) debenture portion is established at the time of the sale of the debenture, and is fixed for the life of the loan.

A 10-year fixed rate and a 20-year fixed are available. The term/amortization is determined by the useful life of the assets. One loan may be provided for all project assets using a “weighted average life”.

  • Land/Building (25 years)
  • Machinery/Equipment (up to 20 years depending on useful life)

Eligible Uses of Proceeds

  • Acquisition of land
  • Construction of new building
  • Purchase of existing building
  • Renovation of existing structure
  • Machinery & Equipment
  • Professional Fees (survey, appraisal, environmental, architect, etc)
  • Signage
  • Construction fee/Interim Interest

Types of Eligible Businesses

  • For-Profit
  • Owner must be a legal, U.S. resident
  • Owner-occupied (borrower must occupy at least 51% of existing building and at least 60% of    “new” building)

Job Creation

One permanent job should be created or retained per $65,000 of SBA funds loaned. If fewer jobs are created/retained, the project must demonstrate a high positive economic impact acceptable to the SBA as pertains to certain documented community projects and as applicable to certain national objectives.

Benefits to Borrower

  • Reasonable Fixed Interest Rate
  • Reduced cash/equity injection
  • Longer Repayment Terms
  • Subordinated Mortgage (attracts banker participation)
  • SBA note is assumable
  • Quick Response-Turn-around time with SBA is 2-3 business days.

Benefits to Bank

  • Customer base is increased
  • CRA requirements are satisfied
  • Credit risk is reduced
  • Bank is allowed to determine its interest rate
  • Loan may be eligible to be sold in secondary market
  • Minimal paperwork. (CADDA prepares the application; Bank provides commitment letter)


  • Bank Senior Mortgage Fee– a one-time fee of one-half (1/2%) of the principal amount of the senior mortgage associated with the 504 loan must be paid to SBA at time of closing.
  • Debenture fees– 2.15% are based on and included in the debenture amount. This charge is composed of a Funding fee (.0025), CADDA’s Processing fee (.015), and an Underwriting fee (.004). These fees are added to the net proceeds of the project cost and are repaid during the term of the loan.
  • Annual Servicing Fee of .625% is included in the monthly payments. This fee is based on the declining outstanding debenture balance, determined at five-year intervals, and expressed in the “effective note rate”.

Can I Qualify