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