504 Loan Program

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10 YEAR Interest Rate
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20 YEAR Interest Rate
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25 YEAR Interest Rate

Program Advantages

Low Down Payment
As low as 10% for existing businesses
Long Term Fixed Rate
10 years for equipment and 20 or 25 years for real estate
Refinance Existing Debt
Refinance your existing conventional loan with a 504

Is the SBA 504 Program Right for My Business?

Is your business ready to buy a building or invest in new equipment?  Does your current location need repairs and updates? The SBA 504 loan program offers an affordable way for small businesses to fund fixed-asset purchases or re-finance qualifying existing debt. Rates are fixed for the life of the loan and are typically lower than rates on conventional loans.  View Brochure

Eligible Projects

 

 

Program Benefits

  • Borrower down payments are as low as 10%.
    • For a start-up business, an additional 5% down is required.
    • An additional 5% down is required for a borrower's first Special-Purpose Property loan.
  • A below-market, fixed rate for 10, 20, or 25 years on the SBA portion of the financing
  • Longer amortization (Up to 25 years)
  • More inclusive financing (can typically include furniture and equipment with a building)
  • Significant risk reduction for participating banks allowing for better terms and more likely approval
  • Potential for start-up financing or projection-based expansion financing.
  • Typical turnaround is between 45 and 60 days depending on how quickly the borrowers get us the necessary documentation.
  • While there is technically no project maximum, the SBA 504 portion maximum is typically $5,000,000.
    • $5,500,000 per project for manufacturing or green projects.

Typical SBA 504 Loan Structure

  • The participating bank provides 50% of the project financing.
  • St. Charles EDC/SBA provides up to 40% of the project financing.
  • The customer is responsible for as little as 10% of the project financing.
  • The customer can borrow the down payment from the seller or a third party.

Business Eligibility

  • Business must be for-profit and must average less than $6.5 million in profits after taxes in the last two fiscal years and have less than $20 million in tangible net worth (with affiliates)
  • The EDC can service 504 loans in Missouri and the Illinois counties of Jersey, Madison, St. Clair, Monroe, Bond, and Clinton.
  • The minimum project size is $125,000, with no maximum project size.
  • Each owner of 20% or more of the operating company or property owner must guarantee the loan.
  • Per SBA guidelines, the project must promote economic development either through job creation or another economic development goal.
  • Operating Company with common ownership must occupy at least 51% of existing property or 60% of new construction (no passive investment real estate).
  • While there is no minimum required credit score, the SBA does not like random missed payments, recent bankruptcies, or a previous default on government-backed debt.

504 Refinance Program

  • Up to a 90% loan-to-value
  • No cash is required to be injected as long as the total project costs do not exceed a 90% loan-to-value.
  • Allows cash out for Eligible Business Expenses (working capital or other business expenses)
  • Can refinance conventional bank loans of other SBA or government-backed debt
  • Debt was incurred at least six months prior to the application date.
  • The business must have been operating for two years before the application date.
  • The business must have had the same ownership during the two years before the application date.
  • The original loan (s) must be current on payment for the last 12 months.
  • 75% of the original loan proceeds of the loan must be for 504-eligible expenses (acquire, construct, or improve long-term fixed assets)
  • 100% of the loan was strictly for the benefit of the small business
  • Small businesses must meet the occupancy resident requirement at the time of application (51%).
  • Approved 504 refinanced loans must be funded within six months of the approval date (timely submission of all required information is essential).

504 Refinance with Expansion

  • Refinance your existing loan with additional funds for expansion. Get a long-term fixed rate for 20 or 25 years on 40% of the project costs.
  • The loan (s) to be refinanced must be at least two years old.
  • Loan(s) must be current on all payments for at least the previous 12 months.
  • The maximum loan-to-value is 90%.
  • The borrower must occupy at least 51% of the building.
  • Up to 50% of the total project cost can be used to refinance existing debt. 
  • A refinance with expansion involved adding an additional location or adding or making improvements to fixed assets.

Project Spotlight:

Connect

Do you have questions about the SBA 504 loan program, or are you considering it for a project? Use the button below to communicate with our award-winning team. Or, you can reach out directly to Steve Grelle, our SVP of Business Lending.

Steve Grelle | sgrelle@edcscc.com | (636) 229-5685

Connect with the EDC 504 Team