504 Loan Eligibility & Process

The U.S. Small Business Association’s 504 Loan Program provides funding for up to 40% of the total cost of an eligible project for longer loan terms at fixed, below market interest rates with lower down payment requirements. OSDC offers this loan program throughout Ohio.

How it works:
OSDC partners with a participating lender to provide the most attractive financing package. The lender holds a first mortgage and/or lien filing and OSDC/SBA provides permanent, subordinate financing.

Eligible projects include:

• land and/or building purchases
• new building construction or rehabilitation
• machinery & equipment purchases
• long-term leasehold improvements
• purchase of existing business’ fixed assets

Business requirements include:

• for-profit with net worth less than $15 million
• net earnings less than $5 million/year on average over last two years
• owner-occupied commercial real estate
• new construction must occupy 60%/premises with potential of reaching 80%
• existing buildings must occupy 51%/premises
• job creation/retention requirements apply or other SBA objective, such as rural development or expansion of exports

Available Funding: Maximum 40% of Project Cost up to $5 million; May be eligible for up to 5.5 million if project is a Small Manufacturer or for Renewable Energy Production.

Equity injection from 10% to 20% of the total project cost is required.

Minimum collateral requirements are 2nd mortgage or lien position on project assets and personal guarantees.

Costs to the borrower:

• $500 non-refundable application fee
• 2.65% of SBA loan portion; financed into loan
• 1/2 of 1% of participating lender loan amount
• reasonable legal & closing costs

Interest rates:

Prepayment penalties apply on a declining basis.