SBA 504 Loan Program
Long-term, Fixed Rate Financing
SBA 504 loans offer 10- or 20-year fixed asset financing on up to 40% of eligible project costs to qualifying businesses. Low Equity Contribution A 504 loan helps your small business conserve cash for working capital needs. 504 loans require as little as a 10% equity contribution for expansion of existing businesses, a 15% equity contribution for new businesses and a 20% equity contribution for speciality buildings. Below-Market, Fixed-Interest Rate Interest rates on a 504 loan are typically lower than other longterm, fixed rate financing. Historically, the effective interest rate on a 504 loan is about 200 basis points above the US Treasury Bill Rate. Eligible Project Costs The 504 loan program can finance the purchase of land and buildings, new construction or renovations to buildings, machinery and equipment with a useful life of at least 10 years and associated project costs, e.g. professional fees and interim construction financing — but are not available for purchase of rolling stock, inventory or working capital. Eligibility Standards A 504 loan is designed to meet start-up and expansion needs of for-profit corporations, partnerships and proprietorships with a net worth smaller than $15 million and an average net income of $5 million or less for the last two years. |
Our MissionOur mission is to enhance economic development in the City of Des Moines and the Greater Des Moines area.
Our goal is to make the funding programs we administer straightforward and easy to access. Typical 504 Structure
1st Mortgage 50% Bank Minimum 7- or 10-Year Term 2nd Mortgage 40% 504 Debenture 10- or 20-Year Term; Fixed Rate Borrower Equity 10% Cash or Land The maximum 504 involvement is 40% of eligible project costs, not to exceed $5,000,000. Maximum loan size may be increased upwards to $5,500,000 for manufacturers and energy saving businesses. There is no maximum on eligible project costs. Loan Fees and Closing Costs A 504 Loan can be done with no out-of-pocket cost to the small business. Loan fees and closing costs are financed as part of a 504 loan. Typically, 504 loan fees equal three percent of the net loan plus $1,500 in closing costs. |