504 Loan Program

The 504 loan program is an economic development program designed to finance fixed assets for small businesses on reasonable terms and to stimulate employment through a job retention/creation goal. A 504 project has three main partners and generally: a Third Party Lender provides 50% or more of the financing; a Certified Development Company (Southland) provides up to 40% of the financing through a 504 debenture (guaranteed 100% by the SBA); and an applicant (borrower) injects at least 10% of the financing. New businesses, and those purchasing single purpose properties, must inject at least 15%. A list of properties the SBA deems single purpose can be found on the FAQ page.


Low down payment & enhanced cash flow

Long term financing at competitive interest rates

Request Info

Please contact us if you have any questions regarding Southland EDC or the 504 loan program (new loan requests, closing, and servicing).

Email us at: requestinfo@southlandedc.com      or Call Us (888) 600-8855

Your information will not be shared and you will not be added to distribution lists unless you request otherwise.


Eligibility Requirements

The Small Business Applicant must be an operating business, be organized for profit, be located in the United States (includes territories and possessions), be small, and demonstrate a need for the desired credit.

What is the SBA definition of small?

Business + Affiliates Tangible net worth of 15 million or less

Business + Affiliates average net profit over the last two years of $5 million or less

What does the SBA consider affiliated businesses?

Affiliation can exist through common ownership, common management, excessive restrictions upon the sale/transfer of a franchise interest, or control by franchisor/licensor/dealer/jobber, etc. either directly or through an affiliated entity or agent such that the applicant does not have the independent right to both profit from its efforts and bear the risk of loss commensurate with ownership.

Eligible Uses of an SBA 504 Loan

Acquisition of vacant land, building construction, acquisition of existing buildings, major renovations and/or additions to existing buildings, marine facility acquisition (including fishing vessels and commercial boats), purchases of capital equipment (including heavy machinery), and associated costs such as title and insurance, legal fees, appraisals, environmental reports, architect fees, surveys, equipment installation, points on the bridge loan, furniture and fixtures.

If you have any questions regarding eligiblity contact one of our Loan Officers today.

Program Outline

The 504 loan program is an economic development program designed to finance fixed assets for small businesses on reasonable terms and to stimulate employment through a job retention/creation goal.

Projects are typically structured as follows;

Project Structures

Typical Limited or Special Purpose Property Limited/Special Purpose Property & a New Business
Third Party Lender 50% 50% 50%
Southland/SBA 40% 35% 30%
Borrower 10% 15% 20%



We recommend that clients obtain a pre-approval of their request either through Southland or the lending partner. This will insure all eligibility/financial issues are addressed before the project costs have been finalized. This will also give the client a clearer picture of what the target purchase price would need to be in order to qualify.


Once the project has been prequalified and the costs have been determined it’s time to obtain the necessary approvals to insure a prompt close. Approval consists of four primary components: first is the formal approval of the loan request from both the SBA and the lending partner, second is approval of the appraisal by both the SBA and lending partner if the project involves real estate or used equipment, third is approval of the environmental investigation if necessary, and finally approval is for any changes or restructuring that was done prior to the close.


After all of the necessary approvals have been obtained and the paperwork has been drawn it’s time to fund the requested loan. Funding initially takes place when the Bank closes the permanent first and the bridge second. Typically the SBA’s portion funds 30-45 days after the initial Bank funding on straight purchases. Project involving construction need to be fully disbursed prior to the SBA being able to replace the bridge with the permanent second. Concurrent signings are possible with advanced notice.

Debt Refinance


If the project involves expansion, any amount of existing indebtedness that does not exceed 50% of the cost of the expansion may be refinanced.  "Expansion" includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the applicant.

Without Expansion

SBA may approve a refinance project of qualified debt (commercial loan) that does not involve an expansion, however there are eligibility and loan-to-value limitations.  These projects can cover the cost of eligible business expenses incurred prior the project.

To see if you project qualifies reach out to one of our experienced professionals.

Loan Comparison

Small businesses have three primary options when it comes to financing fixed assets for their business. Two of the options are SBA programs (504 & 7a) and the third is done directly by a Bank. Each option has its pros and cons. As a borrower it is important to understand what those are before choosing which option best fits their needs.

Below is a basic analysis of each product. Be sure to consult with your Loan Officer and Lender. For a side to side comparison of the three contact one of our loan officers today.

Email us at: requestinfo@southlandedc.com      or Call Us (888) 600-8855

Conventional 504 7a
Various Uses Commercial RE and Equip General Purpose
20-30% Down Payment As low as 10% down As low as 10% down
Fixed or Variable Rate Fixed Rate Typically a Variable Rate
Property is Collateral Property is Collateral Additional Collateral May be Required
Fees Determined by Lender Lowest fees allowable by SBA Fees vary by size of loan

Historical Rates

Month Effective SBA Interest Rate
Feb-2021 2.75 %
Jan-2021 2.69 %
Dec-2020 2.62 %
Nov-2020 2.55 %
Oct-2020 2.58 %
Sep-2020 2.41 %
Aug-2020 2.27 %
Jul-2020 2.41 %
Jun-2020 2.60 %
May-2020 2.76 %
Apr-2020 3.03 %
Mar-2020 2.88 %
Feb-2020 3.46 %
Jan-2020 3.71 %
Dec-2019 3.64 %
Nov-2019 3.74 %
Oct-2019 3.48 %
Sep-2019 3.46 %
Aug-2019 3.63 %
Jul-2019 4.00 %
Jun-2019 4.09 %
May-2019 4.39 %
Apr-2019 4.53 %
Mar-2019 4.74 %
Month Effective SBA Interest Rate
Feb-2021 2.71 %
Jan-2021 2.65 %
Dec-2020 2.58 %
Nov-2020 2.52 %
Oct-2020 2.55 %
Sep-2020 2.36 %
Aug-2020 2.21 %
Jul-2020 2.34 %
Jun-2020 2.52 %
May-2020 2.68 %
Apr-2020 2.95 %
Mar-2020 2.80 %
Feb-2020 3.39 %
Jan-2020 3.64 %
Dec-2019 3.58 %
Nov-2019 3.68 %
Oct-2019 3.40 %
Sep-2019 3.36 %
Aug-2019 3.53 %
Jul-2019 3.91 %
Jun-2019 3.98 %
May-2019 4.26 %
Apr-2019 4.36 %
Mar-2019 4.58 %