SBA 504 Program

As an associate of the Empire State Certified Development Corporation, the Rensselaer County Industrial Development Authority is able to participate in financing arrangements offering 90% financing for real estate acquisition, renovation and/or construction through the SBA 504 Loan Program.

Equipment financing can also be accessed on favorable terms. Such financing conserves working capital and, because real estate loans are written for twenty year terms with fixed interest rates, it also insulates small business borrowers from dramatic interest rate increases.

• U.S. Small Business Administration guaranteed loans (100% guaranty).
• Available to new and existing businesses that meet SBA size standards.
• Minimum project cost $188,500; maximum: unlimited (however, $2,500,000 is top amount where the $1,000,000 second mortgage will equal 40%).
• Minimum loan amount: $75,000; maximum: $1,000,000.
• SBA portion of financing cannot exceed 40% of project cost (35% for a startup business or special use facility; 30% for a startup business and a special use facility).
• Typical financing example for a $500,000 real estate project:
• Bank loan: $250,000 (1st mtg; 10 years; market rate)
• SBA: $200,000 (2nd mtg; 20 years; fixed rate)
• Project Owner: $50,000 (cash equity contribution)

To be eligible, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

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