The Small Business Administration was formed in 1953 by The United States Government to help businesses develop and grow. With the intent of preserving free and competitive enterprise within our nation, the SBA offers a 504-loan financing alternative for small businesses. This program is designed to maintain the strength of our economy as well as promote opportunity for American entrepreneurs.

SBA 504 loans are a partnership consisting of the SBA, the business applicant and a third party lender. Usually, these loans are used for special projects, as the loan works by dividing the amount borrowed between the third-party lender, the business applicant and the SBA.

Traditionally, the third-party lender will provide 50% of the funds necessary and will determine the interest rate and terms. The SBA will then provide 40%, which cannot exceed two million dollars and must be for a term less than or equal to 20 years. Lastly, the small business applicant must provide the remaining 10%. The business applicant will never have to provide more than 10% unless the property being funded is for special-use purposes.

Benefits Include: Financed Loan Fees / Lower Down Payments / Easier Qualification Terms.

Most commonly, SBA loans are used to fund the purchase and/or renovation of business buildings, land improvement acquisitions and long-term equipment purchases. Unfortunately, not all businesses will qualify for financing under the SBA 504 program.

ALL applicants must be in a for-profit business. Non-profit organizations, as well as banks, real estate companies and other development agencies are disqualified per SBA regulations. Other stipulations require that the business applicant be worth no more than 7 Million dollars in total and profit less than 2.5 Million annually for two consecutive years. As an added requirement, the SBA mandates that all 504 applicants provide evidence of one job being created or retained for each $35,000 borrowed. Additionally, all candidates must be the primary users of their facilities, 51%+, or 60%+ in the case of new construction.


The SBA 504 (Small Business Administration loan program) is specifically designed for small and medium businesses purchasing commercial property. This loan type can become fairly complex and it is recommended to research the various restrictions before applying.

As mentioned earlier, the SBA requires 51% occupancy within a year of taking ownership. Due to this, two operating companies sometimes form a holding company to meet the requirements necessary to secure the title. SBA loans provided by Griffin Capital Funding provide long-term fixed-rate financing for projects between $150,000 and $10 million. However, the 504 loans may not exceed 40% of the total project cost.

Those eligible must be for-profit and engaged in retail, wholesale, service or construction industries. Manufacturing companies also qualify as long as the business and affiliates are capable of meeting qualification standards. More so, applicants must be either US citizens and/or permanent residents who own a majority interest in the business and/or holding company.

Eligible project costs include, but are not limited to: building construction, renovation and expansion, as well as land improvements, equipment acquisition and professional engineering fees.

Ineligible expenses include those attributable to general business activities, such as as working capital, debt consolidation and vehicle purchases. While these do not qualify under the SBA program, GCF offers a variety of other loans to meet these needs.

The SBA 504 loan examines three factors:

  • Net Income-Must not exceed $2.5 million
  • Net Worth -Should be at or under $7.5 million
  • Project Size -Must be greater than unencumbered liquid assets of the principles.

When properly prepared documentation is provided, the business application progresses smoothly – saving the owner interest points at the same time. These transactions typically close within 60 days, but vary according to the level of attention required. Griffin Capital Funding typically issues pre-approvals within 24-48 hours of contact, with official decisions being made within five business days.

NOTE : Loan terms range between 10 to 20 years for real estate and equipment, but most equipment terms require repayment within 10 years — commercial real estate within 20 years. Interest rates are fixed for the full length of the loan, while other terms, such as collateral / prepayment vary per transaction.

Contact now for SBA 504 Loan.