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Makeover Magic

The SBA may give its underused 504 loan program a face lift. How will that help you?

This story appears in the July 2003 issue of Entrepreneur. Subscribe »

Considering how tough it is for entrepreneurs to find inexpensive financing, you would think the purses of government-subsidized programs would be routinely raided. Yet the SBA's 504 Certified Development Company Program--which awards below-market, fixed-rate loans to small businesses for real estate and heavy equipment purchases--has been underutilized every year since 1996. In fiscal 2002, for example, Congress authorized $5.4 billion for the 504 program, but less than half, $2.5 billion, was actually used for approved loans.

That has the SBA scratching its head. "This is a once-in-a-generation opportunity to lock in rates on a 20-year 504 loan at somewhere around 6 [percent]," says Jim Hammersley, director of loan programs for the SBA. "With rates as low as they are, more people should be taking advantage of that."

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