| Small Business Administration
(SBA) 504 Loan Program
OOC is authorized to finance projects using
the SBA 504 loan program which is designed to promote economic development
growth and job creation in small businesses. The program can make
the overall financing structure for a new business or project more
attractive and affordable.
The program offers accessible, fixed rate,
long term financing for land, buildings and equipment. Businesses
eligible for SBA 504 loans are independently-owned, for-profit businesses
that are ready to expand and create jobs. They must have a net worth
less than $6 million and annual after-tax profit of less than $2
million. An SBA Certified Development Company (CDC), such as OOC,
finances 40 percent of the project with an SBA 504 loan, and the
small business provides ten percent equity.
Some of the key points to know about
the SBA 504 loan program are:
- for every $50,000 of a regular SBA 504
loan, the project must create at least one new job;
- for every $100,000 of a manufacturing
SBA 504 loan, the project must create at least one new job;
- machinery and equipment financed must
have a useful life of at least 10 years;
- for construction of a new building, the
small business borrower must plan to occupy at least two-thirds
of the space;
- for purchase or remodeling of an existing
facility, the small business borrower must plan to occupy at least
51 percent of the space;
- the borrower must qualify as a small business.
According to the SBA, about 98 percent of all U.S. companies meet
the agency's definition of a small business; and
- the maximum size of a regular SBA 504
loan is $1.5 million, while the maximum for a manufacturing 504
project is $4 million. The interest rate is fixed for the entire
10 or 20 year term of the loan.
NOTICE--Important
information about identification procedures when obtaining an SBA
504 loan:
To help the U.S. government fight the funding
of terrorism and money laundering activities, federal law requires
all Certified Development Companies to obtain, verify and record
information that identifies each person who applies for an SBA 504
loan.
What this means for you:
When you apply for an SBA 504 loan, we will ask for your name, address,
date of birth, and other information that will allow us to identify
you. We may also ask to see your driver's license or other identifying
documents.
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