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A Historical Look at the SBA 504 Loan Program

The 504 Loan program was created in 1958 by the Small Business Administration. Its purpose is to provide 20-year fixed-rate financing options for small business owners who need more capital to purchase land, facilities, equipment, machinery and more.

Ryan Brother Coffee

(Above) Ryan Brothers Coffee in San Diego, CA. The photo features owner Tom Ryan (left) with Tim West, Vice President, Wells Fargo Bank who provided the first mortgage for the project. The SBA 504 loan was provided by CDC Small Business Finance Corp. San Diego, CA.



Anderson Engineering

(Above Photo) Anderson Engineering staff in front of their new building. SBA 504 loan provided by SPEDCO in New Brighton, MN.

Anderson Engineering

(Above Photo) Hunter Animal Hospital in Salt Lake City, UT - SBA 504 Loan provided by Mountain West Small Business Finance in Salt Lake City, UTHow Big is Your Project?


Eligible Uses

  • Acquisition of vacant land
  • Building construction
  • Acquisition of existing buildings
  • Major renovations and/or additions to exisiting building
  • Marine facility acquisition, including fishing vessels and commercial boats
  • Purchases of capital equipment, including heavy machinery
  • Associated costs such as title and insurance, legal fees, appraisals, environmental reports, architects fees, surveys, equipment installation, points on bridge loans, furniture and fixtures, etc.

Loan funds may NOT be used for working capital, mortgage broker fees, bridge loans during the construction period, business inventory, rolling stock (i.e. trucks) or refinancing of existing debt of the business.

Eligibile: Companies consistent with the following criteria

  • Legal entity - corporation, partnership, sole proprietor, limited liability company
  • Located in the United States
  • Net worth under $15 million and net profits under $5 million
  • Participation by another lender who finances up to 50 percent of project costs
  • Economic development goals must be achieved through the project financing
  • Owner-user of the project being financed must occupy at least 51 percent of the property for an existing building or 60 percent of a newly constructed building. Two or more unrelated small businesses can receive an SBA 504 loan if they combine to meet occupancy requirements.

Not Eligible: Companies not consistent with the following criteria

  • A not-for-profit (exception for sheltered workshops)
  • Engaged in lending; a passive holder of real estate and/or personal property; a life insurance company – however an insurance agency is eligible)
  • Located in a foreign country or owned by aliens who do not have legal permanent resident status
  • Has restriction on patronage
  • Is a government-owned entity (exception for Native American tribes)
  • Engaged in promoting religion
  • Consumer and marketing cooperatives (producer cooperatives are eligible)
  • Engaged in loan packaging
  • Owned by persons of poor character
  • Equity interest by lender, CDC or associates in applicant concern
  • Provides prurient sexual material
  • Has previously defaulted on a federal loan
  • Engaged in political or lobbying activities
  • Speculative businesses


The SBA 504 loan program can be an excellent financing option for franchisees. When evaluating a franchise opportunity, look for one listed with the FRANCHISE REGISTRY. If the franchise system is eligible for this program, you will receive expedited loan processing through the SBA.The SBA 504 loan program is not a real estate investment tool.It exists to help small businesses expand and create jobs to benefit their communities.

Applicable Projects

Project Sizes

Most growing businesses are adding staff as they expand and look for larger facilities.

This is when an SBA 504 loan is the perfect choice for financing the new facility!

SBA 504 loan size is linked to job creation . A small business owner must create and/or retain jobs to qualify for an SBA 504 loan. In general, an entrepreneur can borrow $65,000 in SBA 504 loan funding for each job created and/or retained within two years.

Jenny's Floral

(Above Photo - Jenny's Floral in Custer, SD. SBA 504 loan provided by Black Hills Community Econ. Development, Inc., Rapid City, SD)


There is no limit to the total project cost, however, a CDC can lend you up to 40 percent of the project cost with a dollar cap of $5,000,000 depending on the type of project.

CDCs can exceed $5,000,000 and go as high as $5,500,000 of SBA 504 financing for eligible manufacturing projects and for projects that incorporate energy saving technologies for sustainable design.

Manufacturing & Energy Efficient Projects

  • Eligible manufacturing projects
  • Projects Incorporating energy saving technologies for sustainable design
  • Projects that generate renewable energy like solar, wind or geothermal
  • Small businesses wishing to purchase, construct or retro-fit facilities incorporating energy saving technologies that result in a 10 percent decrease in energy consumption.

1725 Desales St. NW, Suite 504
Washington, DC 20036

CLICK HERE to submit a general inquiry to be forwarded to the appropriate individual on-staff.
(202) 349-0070

Ext.14 Claire O'Rourke
Ext. 16 Rhonda Pointon
Ext. 17 Denise Ripley
Ext. 18 Mandy Robertson
Ext. 19 Heather McNelis

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