SBA 504 Eligibility

The U.S. Small Business Administration established the 504 Loan Program to provide growing businesses with long-term, fixed-rate financing for the purchase or refinance of major fixed assets, such as land, buildings, machinery and equipment.


  1. Working in conjunction with a conventional bank the SBA 504 program allows your project to be financed with just a 10% equity injection from you.  Typical bank financing requires 20%.  This will differ if your business is a start-up and/or the property is determined to be single purpose, such as a hotel.  An additional 5% down is required for each.  With financing available for up to 90% of the project cost, SBA 504 loans offer an affordable down payment, enabling the entrepreneur to conserve working capital and retain liquidity to meet operating needs.
  2. Typical bank-only financing involves an adjustable rate during the life of the loan.  With the SBA 504 program, 40% of your project will be funded by the U.S. Small Business Administration at a 20-year fixed rate (10-year for equipment) and is typically below the banks initial loan rate.


The applicant must be a for-profit corporation, partnership or proprietorship. The net worth of a business must not exceed $15 million, and the average net profit after tax must not exceed $5 million (average over the last two years).

Ineligible Businesses

  • Not-For-Profit Corporations
  • Lending Institutions
  • Gambling Concerns


Eligible Use of Proceeds

  • Purchase of land
  • Purchase or construction of owner-occupied building
  • Modernization, renovation, restoration of a building including leasehold improvements
  • 10% contingency on a construction project
  • Purchase of equipment with life of 10 years or more
  • Other attendant soft costs such as accountants, engineers, appraisers, construction period interest, etc.

Ineligible Use of Proceeds

  • Working Capital
  • Debt consolidation or repayment
  • Inventory
  • Refinancing