Mon-Fri 8:00am-6:00pm    (512) 433-1175
Mon-Fri 8:00am-6:00pm    (512) 433-1175

SBA 504

What is the SBA 504 Program?

The U.S. Small Business Administration (SBA) 504 Program is a financing tool geared toward promoting economic development in communities. With long terms and fixed interest rates, small businesses can expand and modernize their business with confidence.

The 504 loan can be used to purchase owner-occupied commercial real estate or fixed assets. Banks can finance up to 50% of the cost and SBA will finance up to 40% of the cost, leaving as little as 10% to be covered by the borrower. SBA 504 loans are only available through a Certified Development Company like TXCDC. TXCDC is here to facilitate and promote the SBA 504 loan program to contribute to the economic development of Texas.

What are the SBA 504 Program Benefits?

  • Low down payment and enhanced cash flow: SBA 504 loans can offer an affordable down payment with financing up to 90% of the projects cost with your lender
  • Long term financing at competitive fixed interest rates: SBA 504 loans offer 10, 20 to 25 year, fully amortized financing with lower monthly fixed payments
  • Customized ownership options: the borrowers can hold the title to the building personally or even set up a holding company for the real estate. They have the flexibility to maximize tax benefits and minimize liability.

Which Businesses are Eligible?

  • For-Profit business located in the US
  • Business with less than $15 million tangible new worth and less than $5 million profit after taxes including affiliates.
  • Business that occupancy at least 51% of their existing property or initially occupy 60% of a newly constructed property
  • All owners with 20% ownership must provide a personal guarantee

How can funds be used?

  • For businesses to own their facilities: for expanding, setting up a new location or purchasing a building they have been renting
  • For purchasing of major equipment: purchase new or used long-term machinery and equipment (Cannot finance equipment on wheels)
  • For soft costs: such as architect and engineering fees, interim interest, environment and appraisal reports, closing costs and other fees

Equity Injection

  • May come from equity of existing land or real estate if owned for more than 2 years
  • New businesses require minimum 15% down
  • Established businesses purchasing special purpose property require minimum 15% down
  • New businesses purchasing special purpose property require minimum 20% down

Ineligible use of funds

Working Capital
Business Inventory
Broker Fees
Finder Fees
Franchise FeesIncorporation
Organizational Costs
Advertising Fee
Bank Attorney Fee
Business Inventory
Liability insurance
Tenant Improvements