When 504 Financing Makes a Difference

When business can not afford to put more than 10% cash into project

  • Especially in cases of more expensive building acquisition/construction when there is only one business owner.
  • Example: Construction of modern veterinary hospital with boarding facilities

When business has a short track record – not long enough for conventional standards.

  • A young (less than two years old) company that hasn’t had time to build retained earnings and has just begun to show profitability.
  • Start-ups can be eligible in some cases

When business is in a high risk industry that discourages conventional lenders.

  • Examples: restaurants, tourism related, recreational
    When project real estate is special purpose and not able to attract sufficient conventional capital.
  • Examples: hotels/motels; convenience stores/gas stations; long-term care facilities.

When business history doesn’t show ability to support project debt.

  • Selected startup situations; fast growth company; business that has experienced recent financial crisis.
    When an established business is moving aggressively into new market or new production process.
  • Business that is moving into the manufacture of a product it has been distributing.