SBA 504 Loans

If you have not considered the 504 program for your growing business, you may be missing the "best financing tool available".

MADC is designated by the Small Business Administration (SBA) as a Certified Development Company to package, close, and service SBA 504 Loans. The SBA 504 loan provides small businesses with financing for the purchase of long-term fixed assets such as land, building and equipment. Our company works with private lenders, such as a bank, to provide 10 or 20-year financing with as little as 10% down on the total project. The SBA portion of the financing is fixed at below market interest rates. Terms on the bank loan are negotiated with the lender.

Example: Day Care Center
1st Mortgage Lender $600,000 (50%)
MADC SBA 504 Loan $480,000 (40%)
Borrower Equity $120,000 (10%)
Total Project $1,200,000

SBA 504 Loans

Small Business Owner Advantages:

  • Fixed Rate up to 40% of Total Project Cost
  • Lower than Market Rates
  • Longer Than Market Term
  • Low Borrower Equity

Private Lender (Bank) Advantages:

  • Lower Risk
  • Excellent Loan to Value
  • CRA Credit
  • Fixed Asset Collateral saves A/R and Inventory for Working Capital Loan

Eligible Use of Funds:

  • Land & Building Acquisition
  • Building Expansion
  • Building Construction or Renovation
  • Machinery and Equipment

Eligible Businesses:

  • The company must be a for-profit corporation, partnership, LLC, or proprietorship whose net worth does not exceed $500,000.00 and whose average profit after tax for the last two years does not exceed $3,000,000.00.

Project Size:

  • Private Lender: The maximum loan amount of the private lender is not limited by the SBA. However, the private lender must fund 50% of the total project cost.

Maturity Terms:

  • Private Lender: The minimum term of the bank loan is 10 years.
  • SBA: The SBA 504 loan offers either a 10-year or a 20-year term, depending upon the useful life of the assets financed.

Interest Rate:

  • Private Lender: The bank rate is negotiated with the small business.
  • SBA: The SBA rate is fixed and determined from the SBA bond sale; the 20-year Treasury note is an indicator.

Ineligible Businesses:

  • Passive Investment Companies
  • Real Estate Investment Companies
  • Non-Profit Corporations
  • Financial Institutions

*NOTICE IMPORTANT INFORMATION ABOUT IDENTIFICATION PROCEDURES WHEN OBTAINING A 504 LOAN

To help the government fight the funding of terrorism and money laundering activies, Federal law requires all Certified Development Companies to obtain, verify, and record information that identifies each person who applies for a 504 loan.