SBA 504 Loans for Small Businesses – Loans for Business Growth

Date: May 23, 2022

Small businesses needing additional financing relief for major fixed assets such as equipment or real estate may want to consider applying for an SBA 504 loan. The following is a brief overview of the 504 Loan Program. Verification and more detail can be found on the SBA 504 Loan webpage, this SBA 504 Loan Guide, or through TMC Financing (a 504 loan lender).

What Is it?

The 504 loan is long-term fixed rate financing of up to $5 million for major fixed assets that would promote business growth and job creation.

  • Terms:
    • 10- and 20-year terms available
  • Interest Rates:
    • Above the current market for 5- and 10-year Treasury issues
    • Current rates are 4.92% for 10-year terms or 5.05% for 20-year terms
    • Totaling approximately 3% of the debt and can finance with the loan
  • Down Payment:
    • Typically, only 10% of the loan’s value

Do I Qualify?


To be eligible, a business must meet the following requirements:

  • For-profit company in the US or its territories
  • Net worth of less than $15 million
  • In the 2 years preceding application, average net income of less than $5 million after federal income taxes
  • Be within SBA size guidelines
  • Have qualified management expertise, a feasible business plan, and good character
  • Ability to repay the loan
  • Meet job creation requirements
  • Plan to occupy at least 51% of an existing structure or 60% of a new structure
  • No prior default on a federal loan
  • Not engaged in:
    • Passive activities, speculative activities, lending, political/lobbying activity, or gambling activity

How Can I Use/Not Use Funds?


  • Purchase or construct:
    • Existing buildings or land
    • New facilities
    • Long-term machinery or equipment
  • Improve or modernize:
    • Land, streets, utilities, parking lots, landscaping, or existing facilities
  • Prohibited Uses
    • Working capital or inventory
    • Consolidating, repaying, or refinancing debt
    • Speculation or investment in rental real estate
    • Purchasing and holding real estate – all real estate purchased with the loan must be utilized for business needs

How Do I Apply?



The SBA 504 loan is an ongoing financial resource for small businesses and is not related to COVID-19.

For more information on the Small Business Legal Center, visit If you have questions on the SBA 504 loan program, you can email us at [email protected].


Updated May 23, 2022

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