The project may include land, no matter how long held. The value of the land will be at cost of the purchase price if, land was acquired within 2 years of the SBA 504 loan application. Current market value used when land is acquired over 2 years prior to SBA 504 application with a professional appraisal. Land improvements integral to the project can be included as eligible project costs.

Examples of eligible land improvements are grading, new streets including curbs, solar panels, retainage ponds, parking lots, utilities, and landscaping.

All construction expenses can be considered part of the SBA 504 project cost. When constructing a new building, the borrower must immediately occupy at least 60% of the rentable property with plans to occupy some of the additional space within three years and plans to occupy all of the remaining space (not leased out) on a long-term basis within 10 years.

A borrower may lease up to 20% of the square footage of the rentable property. However, the total square footage of all buildings or facilities must be used for business operations.

All costs to acquire and improve an existing building are eligible for an SBA 504 loan, provided, the purchase price is supported by an appraisal acceptable to SBA.

For a building partially leased out, costs for improvements integral to the structure of the building are eligible project costs. Examples include facade expenditures, heating, electrical, plumbing and roofing costs. However, costs in connection with finishing the interior space to be leased out are not eligible.

Furniture and fixtures may be included in the project cost if the dollar amount compared to the total project is minimal (less than 10%) and will not affect the maturity based upon a weighted average useful life.

Expenses associated with the purchase, transportation, dismantling, or installation of machinery and equipment may be considered part of the project cost. Example, a machine which typically requires a specialty moving service.

For machinery and equipment only projects, the machinery and equipment must have a remaining useful life of at least 10 years.

Expenditures for professional services and fees directly attributable and essential to the project are eligible.

• Appraisal
• Environmental
• Architectural fees
• Engineering fees
• Certificates of Occupancy and Completion
• Settlement
• Studies
• Survey
• Legal fees: related to zoning and permitting.
• Title fees
• Underwriter fees
• Lender title insurance
• Escrow fee
• Recording fee
• Flood certificate
• Interim interest, fees and points
• Origination fees for Interim loan