Established in 1984, SETEDF is a non-profit Certified Development Company that promotes economic development within the community through the Small Business Administration SBA 504 Loan Program.
We are regulated by the federal government and work with participating lenders (typically banks & credit unions) to provide capital in the form of long term loans to small businesses.
SBA 504 Basics
What is the 504 Loan Program?
The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth and job creation.
The 504 Loan Program is designed to provide financing for the purchase of fixed assets such as real estate, and building acquisitions, as well as equipment and machinery, at below market rates. Interest rates are fixed for the term of the loan which can be 10, 20 or 25-year terms depending upon the project.
$250,000 to $15,000,000
Borrower's Down Payment
10% - Most Projects
15% - Start-up (less than 2 years in operations) or special-purpose properties
20% - Start-up and special-purpose properties
Understanding the SBA 504 Loan Structure
SBA 504 loans can be a bit confusing. However, once you understand the loan structure you will easily see how the SBA 504 loan program is the ideal financing option for small businesses.
The typical financing structure for a SBA 504 loan is a 50-40-10 partnership. The third-party lender (bank or credit union) will finance 50% of the project; SETEDF/SBA finances 40% and; the borrower provides at least 10% equity injection.
This structure makes it possible for small business owners to own commercial real estate with less money down.
The long-term and fixed interest rate also allows the borrower to preserve cash flow for operations.
SBA 504 Loan Structure :
|1st Mortgage / Third Party Lender
|2nd Mortgage / SETEDF-SBA Portion
|Total Project Cost