SBA 504 Loan

How the SBA 504 Loan Program Process Works

H-GALDC works directly with the financial institution and business applicant to develop financing packages that meet SBA 504 Loan Program guidelines and credit criteria.

The staff then processes, closes, and services the loan. SBA 504 Loan Program loans offer lower, fixed interest rates and longer, 20-year repayment terms.

The borrower contributes less equity, which preserves liquidity, and longer terms help improve cash flow. Borrowers can roll most of the soft costs of obtaining the loan into the project financing. Partner lending institutions fund 50% of the project amount and hold the first lien on the loan.

Typical SBA 504 Loan Project Structure

$1,000,000 Project Example

Eligibility

Qualifications

  • Is the business for-profit and located in Texas?
  • Will the business occupy at least 51% of the project property for existing buildings or 60% of the project property for new construction? Or, will the equipment be used for business operations?
  • Does the business, including affiliates, have a tangible net worth of less than $15 million and after-tax profits, averaged over the last two years, of less than $5 million?

If the answer is “yes” to all of these questions, the project will likely qualify for the 504 Loan Program.

Job Creation/Retention

One job must be created for every $65,000 borrowed for most projects ($100,000 for manufacturers).

Eligible Use of Funds

  • Land
  • Purchase of Existing Buildings
  • New Construction
  • Fixed Assets from Business Acquisition
  • Building Expansion/Renovation
  • Long-Term Equipment
  • Professional Fees
  • Lender’s Interim Points & Interest
  • Debt Refinance (Expansion Projects-debt refinance may not exceed 50% of the new expansion costs)

VetLoan Advantage

To help veterans get the financing they need for small business ownership and success, H-GALDC is proud to offer the VetLoan Advantage program.

H-GALDC will issue a cash rebate of up to ½% of 1% of the SBA 504 loan amount or up to $5,000 to help offset the veteran’s loan expenses, including appraisal and environmental reports.

Your SBA 504 Loan in 5 easy steps

Step 1 – Eligibility

Complete an online form to determine eligibility. H-GALDC staff will conduct preliminary review of your project.

Step 2 – Application

Complete application. H-GALDC staff can assist with the application process and work with your bank to obtain a commitment letter. H-GALDC staff will complete the underwriting and submit the application to SBA for approval.

Step 3 – SBA Approval

The Small Business Administration will issue a Loan Authorization upon approval.

Step 4 – Closing/Proceeds

Loan proceeds are disbursed. After all approvals, construction can begin, or applicant can move into existing facility.

Step 5 – Project Completion/Funding

After project completion and funding have been confirmed, applicant will sign all SBA documents and begin monthly payments.

Pre-Application

Please fill out our online form and a member of the H-GALDC SBA 504 Loan program team will contact you to conduct a preliminary review of your project. H-GALDC is licensed for projects located within Texas.