An SBA 504 loan is structured such that it will be advantageous for small businesses to acquire one when property or equipment is needed. The first part of the structure involves a down payment of 10% of the total loan, the next 40% is supplied by a Certified Development Company, and the last 50% is contributed by a private lender. Here’s how you can qualify for an SBA 504 loan, so as to acquire the equipment or property your business needs for growth.
Must Be For-Profit
This particular loan is not offered to non-profit organizations, and to be eligible, your business must be operating with the objective of making a profit. This will cover the majority of businesses, but it will serve to exclude non-profits such as charities and some other types of organizations.
Must Be Domestic
Another important qualification for a 504 loan is that your company must operate within the borders of the United States. That means you will need a physical presence such as a storefront in this country, in order to be considered eligible for this type of loan. Your company has to be considered part of the US market, and one which abides by the laws of commerce set forth for domestic activity.
Net Worth Less Than $15 Million
Any company whose net worth exceeds $15 million, will not be eligible to apply for an SBA 504 loan. This means you will need to be able to accurately estimate the total net worth of your company and be prepared to demonstrate to the SBA that you’re under the threshold required. In most cases, your company’s net worth is equal to its book value, and in order to calculate your book value, you’ll need to subtract all company liabilities from your total assets. This will give you a rough estimate of your company’s net worth, and if it’s anywhere close to $15 million, you may or may not be eligible.
Thinking of Applying for a 504 Loan?
If you’re considering applying for an SBA 504 loan, we’d like to hear from you. At OneClick Commercial Funding, we have worked with the SBA many times in the past, and we may be able to work with you as well, to help you secure the funding you need for your business.