Green Loans with the SBA 504 Loan

Going Green with the SBA 504 Loan

We told you in a previous message that we closed a loan in September for XL Sports World. In fact, depending on how long you’ve been getting messages from us, we’ve told you that several different times. The loan we closed for XL in this year was their fourth SBA 504 loan with us. If you know anything about the 504 program, you may think this a little strange. And if you don’t know much about the 504 program, take it from us that this four loans thing is a little strange. But there’s environmentally-friendly story behind the business and the loans we’d like to share with you.


XL Sports World was started by Ciaran McArdle just outside Orlando, Florida (not far from our old offices). Ciaran’s originally from England, and soccer is sort of a big deal over there. He saw the sport growing in popularity here in the US and decided to build a business around it. He started with planning and hosting tours for teams to travel and see how the game is played at the international level (teams like Harvard, Duke, and Georgetown). From there Ciaran wanted to build indoor soccer facilities to help develop talent. We financed his first loan here in Orlando in 2011, and XL was then able to host and provide space for leagues, camps, private training, birthday parties, and even pick-up games. It wasn’t long before Ciaran and XL were looking to expand their reach. Since 2011, we’ve helped XL build three more facilities in Saco, Maine; Midlothian, Virginia; and Apex, North Carolina (the most recent, where we also closed the permanent first loan).

Limits? What limits

The problem with doing multiple SBA 504 loans for borrowers is there’s a cap on how much a small business owner can borrow per program rules. Typically, it’s an aggregate lending limit of $5 million per borrower. We’re talking about the SBA-guaranteed portion here — the 40% piece of the 50-40-10 structure — that’s capped. Given the $5 million cap, a typical small business owner can potentially finance up to $12.5 million in 504-eligible projects. Depending on the business, you could maybe do a couple 504 loans before hitting your limit. We did have a client a few years back who grew his daycare business to four locations with SBA 504 loans with us. So multiple 504 loans for a single borrower isn’t completely rare, it’s not easy or common. When you total up these four multi-million-dollar projects, XL has cleared the SBA’s cap for a single borrower. But here’s the deal: we can still help them build more facilities with 504 financing because XL has gone green.

Going Green

Under the SBA’s Green 504 provision, projects deemed green or environmentally-friendly are subject to a $5.5 million cap per project. Again, this is on the SBA-guaranteed second mortgage piece. This really opens up the possibilities for small business owners. Without an aggregate cap, entrepreneurs can go back to the well so to speak multiple times to grow and expand their businesses — opening new locations, building new facilities, renovating multiple facilities, etc. So what qualifies a project as a green project? Things like reduced energy consumption, increased use of sustainable designs, reduced use of fossil fuels, reduced use of non-renewable resources, and use of renewable fuels (biodiesel and ethanol) will make a project green in the eyes of the SBA. Now, there’s more to the list of qualifying features and there’s more to know about the program, and we’ll be glad to answer any questions you might have about your project or your borrowers’ projects and whether or not they’re green.


This time of year, we always make a point to stop and think about all the people who’ve helped Mercantile become what it is. We’ve worked with some really wonderful people — business owners, referral partners, CDCs, brokers, lending partners — this year and (like every year) we’re keenly aware that we can’t do what we do without the hard work, trust, and support of others. We’ve been blessed beyond measure and we’re very grateful.

If you ever have questions about SBA 504 loans — or anything pertaining to commercial real estate financing in general — we’re only a phone call or email away. Call us at 1-866-622-4504 or email We’re here to help.

– Your 504 Experts

Leave a Reply

Contact Mercantile Capital Corporation to Speak
to One of Our SBA 504 Loan Experts

Contact Us

As Featured in

  • Forbes logo
  • Fox Business logo
  • The Wall Street Journal logo
  • The New York Times logo
  • Los Angeles Times logo
  • USA Today logo