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Take Another Look: The SBA 504 Loan

The new rules for this program help small businesses buy real estate, equipment and machinery.

If you're looking for money to fund an expansion or to get a better rate on a debt load, check out the new rules of the Small Business Administration's 504 Certified Development Company loan program. The government-guaranteed program is designed to help small businesses purchase real estate, equipment and machinery, as well as to expand current development projects. The American Recovery and Reinvestment Act of 2009 authorized some changes to the program, including provisions that may make it easier to refinance existing loans into this program if that will lead to job creation within two years. The debt can't be more than a third of the total project cost, except in the case of expansion, when it can be up to half the total, and the borrower must meet other qualifications. In addition, certain CDC fees have been temporarily eliminated, making the loans more affordable for small businesses. According to an SBA statement, a typical 504 loan of $1.5 million could save a borrower $12,750 over the life of the loan. For more information on the 504 loan program and eligibility requirements, go to sba.gov/recovery.

Gwen Moran is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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This article was originally published in the October 2010 print edition of Entrepreneur with the headline: Take Another Look: The SBA 504 Loan.

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