Today’s economic conditions make conventional financing methods less viable when financing small business expansions. The SBA (U.S. Small Business Administration) 504 Loan Program isn’t a new program, but one that’s rapidly becoming the norm for small business growth across the nation.

The SBA 504 Loan Program is an economic development financing tool that supports American small business growth and helps communities through business expansion and job creation. The SBA 504 Loan Program is distinguished from any other SBA loan program in the following ways: it requires a lower down payment, which allows a business to conserve valuable working capital; it has a fixed interest rate so the borrower knows the occupancy cost for the next 20 years; the interest rate is competitive and usually below market (the June 2003 rate was 5.980%, which was one of the lowest rates in history).

In addition, all project costs can be financed, including acquisition (land and building, land and construction of a building, renovations, machinery and equipment) and soft costs such as construction contingencies, financing fees, interim interest, etc. The collateral is typically financed assets which may allow other assets to be free of liens and available to secure other needed financing. The SBA 504 loan is long term (20 years) and is self-amortizing. It encourages banks and other lenders to make loans in first position on reasonable terms, which enables them to acquire and retain customers and provides them with Community Reinvestment Act (CRA) credit.

The process for applying for an SBA 504 loan is easy. The borrower should contact their local Certified Development Company (CDC). One CDC in Duval County, the Jacksonville Economic Development Company (JEDCO), has been in business since 1980 and has served more than 450 local businesses with loans totaling some $225 million that have, in turn, created 4,200 new jobs.

Yet most small business owners are not aware the program exists. Now is the time to take advantage of it. In short, the unique advantages of the SBA 504 Loan Program make SBA 504 Loans a win-win for everyone involved.

Kristen Tackett is an SBA 504 loan expert
for JEDCO. She can be reached at
904-398-9411 or kristen.t@jedco.net.