How to Qualify
Under the following guidelines, over 98% of incorporated entities in the U.S. are qualified small businesses and are eligible for an SBA 504 loan. Check below to learn more and see if your business is, too.
- For-profit, non-publicly traded businesses.
- Tangible business net worth (including affiliates) not to exceed $15 million.
- Average net income of the business not to exceed $5 million over the previous two years.
- Personal liquidity of each principal/guarantor not to exceed the total project costs of the proposed 504 loan.
- Ownership must be comprised of 51% U.S. citizens or resident aliens (Legal Permanent Residents).
Ineligible Use of Funds:
- Working capital.
- Rolling stock.
- Business “good will” or “blue sky” (common in business acquisition financing).
Are you eligible for a 504 loan?
- Non-profits (except sheltered workshops).
- Passive holders of real estate and/or personal property.
- Lending institutions (mortgage brokers and correspondent lenders are eligible).
- Life insurance companies (however, franchised agents are eligible).
- Businesses located in a foreign country or owned by aliens.
- Businesses selling products/services through a pyramid plan.
- Illegal businesses.
- Gambling concerns.
- Businesses which restrict patronage.
- Government owned entities (excluding Native American Tribes).
- Businesses engaged in promoting religion.
- Consumer and marketing cooperatives (producer cooperatives are eligible).
- Businesses engaged in loan packaging.
- Businesses owned by persons of poor character.
- Businesses providing prurient sexual material.
- Businesses that have previously defaulted on a Federal loan.
- Businesses engaged in political or lobbying activities.
- Speculative businesses.
If your business didn’t make this exhaustive list, then it’s probably okay.