SBA 504 program
The SBA or Small Business Administration 504 program is typically meant for the small businesses that contribute to the development of the community. The loans are granted for major fixed assets like building or land and they are directed towards the development of infrastructure and other facilities in a community. The small businesses can avail this loan though CDC or Certified development Company which is a non-profit organization directed towards the development of economy of a particular region. The CDC work with SBA and private sector lenders to finance the small businesses. The overall idea is to bring about a viable change in economically weaker sectors by granting loans at a fixed rate.
SBA 504 program is especially meant for the businesses owned by women, veteran, retired person, rural businessmen, minorities and other designated businesses who operate in the sectors that are economically backward. There are about 270 CDCs working in the whole United States with each CDC being assigned to work in a specific geographical region. A typical SBA loan proceeds like this – the private sector being the major lender granting up to 50% of the total project cost. CDC providing 40% of the project cost guaranteed by 100% debentures of SBA and finally the remaining 10% has to be contributed by the entrepreneur of the small businesses. The loan is granted for a long term and the interests are charged at a fixed rate and the loan assets are held as collateral.
SBA 504 loan program eligibility
There are certain eligibility criteria to be fulfilled before you qualify for a CDC loan.
They are as follows:
· The businessman or woman must be a citizen of the United States and the business must operate in the territory of United States.
· The business has a net worth of less than $15 million dollar and a net income of less than $5 million after paying taxes in the preceding two years.
· The bigger businesses are not eligible for the loan and also such individual businesses that have the resources to meet the total cost of the project would not be granted the loan. It must be realized that the loan proceeds are especially meant for the economically backward sectors of the community and small businesses that are unable to meet the cost of a particular project individually.
· The businesses must operate for profits so that the cost of the loan can be met up by the businesses within stipulated time. To operate for the profits you have to have a feasible business plan. Before submitting your proposal you must carefully pan about the project which must be endowed with the twin aspect that it would generate money for the business as well as contribute to the overall development of the community as a whole.
· The personal history of the businessmen are also taken into consideration so as to ascertain whether they want to run a clean business, whether they are paying all their taxes and above all have an ethical integrity and willingness to repay the loan in time.
It is widely known that the SBA 504 loan project is meant for the overall development of individuals and the community as a whole.The small businesses can avail this loan though CDC or Certified development Company which is a non-profit organization directed towards the development of economy of a particular region. The CDC work with SBA and private sector lenders to finance the small businesses. The overall idea is to bring about a viable change in economically weaker sectors by granting loans at a fixed rate. Most SBA loans are granted through a community bank which do a very good job at walking a small business through the process. Many larger banks such as Bank of America or Wells Fargo also make SBA loans.
SBA 504 program is especially meant for the businesses owned by women, veteran, retired person, rural businessmen, minorities and other designated businesses who operate in the sectors that are economically backward. There are about 270 CDCs working in the whole United States with each CDC being assigned to work in a specific geographical region. A typical SBA loan proceeds like this – the private sector being the major lender granting up to 50% of the total project cost. CDC providing 40% of the project cost guaranteed by 100% debentures of SBA and finally the remaining 10% has to be contributed by the entrepreneur of the small businesses. The loan is granted for a long term and the interests are charged at a fixed rate and the loan assets are held as collateral.
Remember that the SBA 504 loan project is meant for the overall development of individuals and the community as a whole. The best way to consult with an SBA lender in your community is to search for one at Checkrates.com
