New Borrowers

What is an SBA 504 loan?

Emerging and expanding businesses often want to buy land and build a new facility. They may want to purchase an existing building – perhaps they have been leasing a facility and their business has outgrown that space. Maybe the business needs to expand or renovate its building, or buy new machinery so it can utilize the latest technology to remain competitive or land a new contract.

These are just a few of the scenarios in which an SBA 504 loan can benefit a small business. Not only does the program provide loans, it does so by sharing the financing with a banking or lending institution and it carries the benefits of:

  • Low, long-term, fixed interest rates
  • 10-, 20-, 25-year terms
  • Down payments as low as 10%

BEFCOR works in partnership with a bank or private lender that loans 50% of the project amount and usually is secured by a first lien position. The SBA 504 loan provides up to 40% of the project financing, secured by a second lien on the assets financed, and supplements the bank’s 50%. The business contributes the remaining amount to complete the project. Variations can occur, based on eligibility and specifics of the project, but the program is often described as 50%-40%-10% financing, meaning the bank offers 50%, the SBA 504 program provides 40% and the business contributes the remaining 10%.


What are the advantages of a 504 loan?

SBA 504 loans offer competitive, low fixed-interest rates, a low down payment (as little as 10%), AND a 10-, 20- or 25-year term.

With a first lien on collateral, the bank is well-secured, which normally allows the bank to offer favorable interest rates and terms for the 504 projects being financed. The result is a financing solution that will likely be more favorable to the business than other available options.


Interested in learning more about SBA loans? Ready to start the loan process? Here are a few simple steps to get you started.

1). Check our Borrower FAQs for the answers to common questions about our lending process.

2). Submit an application and necessary documents to start the loan process:

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3). Contact us with any questions about the loan process or completing an application.