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Frequently Asked Questions - The SBA 504 Loan

what is a 504 loan

What types of businesses are eligible?

Businesses must be for-profit enterprises with a tangible net worth not to exceed $15 million and net profit after taxes of no more than $5 million during the previous two years. The loans are available to individual business owners or multiple owners partnering on a project.

What kind of job creation, community development and public policy goals must be met to obtain a 504 loan?

To be eligible for a 504 loan, applicant businesses must meet at least one of many job creation, community development or public policy goals through their expansion projects. The goal(s) met determine the maximum amount of the 504 loan. Talk to your local loan officer to learn more about loan amounts as they relate to the following goals:

Job creation goals

  • Jobs are created within two years as a result of the project
  • Jobs are retained—if it can be shown that jobs would be lost to the community if the project was not completed

Community development goals

  • Project will help to improve, diversify

    or stabilize the economy of the locality

  • Project will stimulate business development in the community
  • Project will bring new income into the community
  • Applicant business is a manufacturing firm
  • Applicant business is in a labor surplus area

Public policy goals

  • A minority individual owns and controls 51 percent or more of the applicant business
  • A woman owns and controls 51 percent or more of the applicant business
  • A veteran owns and controls 51 percent or more of the applicant business
  • Project is located in a business district of a community with a written revitalization or development plan
  • Project will expand exports
  • Project is located in a rural area
  • Project is necessitated by federal budget cutbacks
  • Project is required by a federally mandated standard or policy
  • Project will increase productivity and competitiveness (retooling, robotics, or modernization)
  • Project will reduce energy consumption by at least 10 percent
  • Project will use sustainable design (LEED Standards)
  • Project will produce renewable energy, micropower, or renewable fuels, including biodiesel and ethanol

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