Wasatch Business Finance

SBA 504 Eligibility
&
Frequently Asked Questions

SBA 504 Eligibility

Most businesses are eligible for the SBA 504 program

To qualify for the SBA 504 program, here are the basics:

 

  • You must occupy 51 percent of the property within one year of funding (existing real estate).

  • For new construction, the business must occupy a minimum of 60 percent of the property.

  • The net worth of the business cannot exceed $15 million.

  • Post-tax profits for the last two years cannot exceed $5 million. Or, you can qualify via size standards based on the number of employees.

The personal net worth of the business owner is not a factor in determining eligibility.

If you are located in Utah, contact us for a free pre-qualification.  Complete eligibility requirements can also be found on the SBA 504 web page.

Contact our team & we’ll get back to you the same business day.

SBA 504 FAQ's

What You Need to Know

  • What is my down payment on an SBA 504 loan?

 

The down payment is generally 10% of the total project cost and can include soft and closing costs.  Startup businesses and special purpose real estate may require a larger down payment.  In no event shall the required down payment exceed 20% of the total project cost. 

 

  • What is the SBA 504 loan structure?

 

The required down payment is generally 10%. The lender finances 50% in a 1st Deed of Trust position and the SBA finances 40% in a second Deed of Trust position. Click here for more information.

  • Can I include closing costs in the loan amount? 

 

Yes, closing and soft costs can be included.

 

  • Can I refinance an existing building loan?

 

Yes, the SBA allows for the refinance of most existing real estate loans.

  • Can I do a cash out refinance on an SBA 504 loan?

 

Yes, The SBA allows for cash out to support operating needs. 

 

  • What is the definition of owner occupied?

 

A building is considered owner occupied when the owner occupies 51% or more of the total space.  When construction is involved, the owner must occupy 60% of the total space. 

 

  • Are startup businesses eligible?

 

Yes, startup businesses are eligible, but may be subject to higher down payments and underwriting restrictions. 

 

  • Am I eligible for SBA 504 loan financing if I have tax liens?

 

No, an SBA 504 loan cannot be used to pay off tax liens and an SBA 504 loan cannot be approved when tax liens are present.

  • Do I have to create a real estate holding company?

 

The SBA requires that the real estate be held in a separate single purpose real estate holding entity.  This is a structural requirement for SBA 504 financing. 

 

  • Will the SBA finance franchise fees? 

 

No, franchise fees cannot be included in an SBA 504 loan.

 

  • Will the SBA finance goodwill and intangible assets?

 

No, goodwill and intangible assets cannot be included in an SBA 504 loan.

Get Pre-Qualified Today!

U.S. Small Business Administration SBA 504 Loan Program Details