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Small Business Administration (SBA) 504 Loan Program

Small Business Administration (SBA) 504 Loan Program. By: Carl Sakony Vice President Appalachian Development Corporation. What attributes does my business/project need to be eligible for a SBA 504 Loan ?. Finance fixed assets: Real Estate and Equipment

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Small Business Administration (SBA) 504 Loan Program

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  1. Small Business Administration (SBA) 504 Loan Program By: Carl Sakony Vice President Appalachian Development Corporation

  2. What attributes does my business/project need to be eligible for a SBA 504 Loan ? • Finance fixed assets: Real Estate and Equipment • For eligible “for profit” businesses doing business in U.S. • Tangible NW < $15MM & < $5MM average net income for past 2 years. • Business demonstrates CF to service loan • Good Character demonstrated through historical willingness to repay debts. • Relevant Management experience and expertise. • Feasible business plan.

  3. Why do I want a 504 loan? • A SBA 504 loan may induce a bank to assist you to finance your business. • Competitive long term interest rates for 10 to 20 years. (30-40% of project) • Minimal required equity contribution to conserve your cash for other purposes. • SBA allows 504 origination fee, closing costs, and other related SBA fees to be included in amount financed conserving the borrower’s cash. (3%) • Reasonable turn around time for loan approval.

  4. How much can I borrow under thi$ program? • Public Policy: The Maximum 504 loan is $5MM. For small manufacturers the maximum 504 loan is $5.5MM. Examples of public policy goals are Rural Development, Expansions of small business owned by veterans and/or women. • Job Creation: $65M for each job created. $100M for each manufacturing job created.

  5. How is a 504 loan structured? • Borrower equity of 10-20%. • 10% for an established business that is expanding • Additional 5% for start up business less than 2 years in operation • Additional 5% for single purpose project • Bank finances up to 50% of project in 1st lien position (50% LTV allows banks flexibility) • CDC finances 30-40% of project subordinated to bank. (Sub debt gives banks more comfort). • Loan is secured by project assets. • Personal guarantees are required.

  6. Who can provide me with a SBA 504 loan? • South Carolina has 4 Certified Development Companies that can provide SBA 504 loans. The ADC is convenient and locally accessible. • Appalachian Development Corp. (Greenville) • 864-382-2358

  7. Where can I learn more? • http://www.sba.gov/category/navigation-structure/loans-grants/small-business-loans/sba-loan-programs/real-estate-and-eq • Copy the above link into your browser for information about the SBA 504 program. • Sakony@adcloans.com • Send me an email with your questions.

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