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SBA offers new loan with longer repayment period

SBA offers new loan with longer repayment period


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The U.S. Small Business Association announced a 504 loan with a 25-year debenture. This is in addition to the existing 504 loans with 10- and 20-year debentures.

Available to all 504 projects approved after April 4, 2018, the new loan maturity date is extended by 60 months, allowing eligible small businesses greater management of operating costs due to lower monthly loan payments.

The 25-year debenture for a 504 loan comes after requests by small businesses, the Certified Development Company Industry (CDCs) and third-party lenders for loan terms that resemble other long-term mortgages, terms such as fixed-rates and common term-to-maturity timing.

“This increased flexibility in their loan terms will put them in a better position to manage their capital and face challenges like rising operating expenses,” said Linda McMahon, SBA administrator.

A 504 loan is offered to small businesses looking to purchase or improve land, buildings and major equipment, to facilitate the creation or retention of jobs and to support local economic development. Applicants put down at least 10 percent; the SBA provides 40 percent of the loan, while the final 50 percent is funded by private sector lenders in accordance with CDCs.

504 loans are attractive due to the competitive low interest rates that are government backed and the maximum loan amount of $5 million. Qualifying businesses must have a tangible net worth of less than $15 million and an average net income of less than $5 million after federal income taxes for two years prior to applying, according to the 504 loan program.

Interested small businesses can contact the Kansas City SBA District Office for more information.

The SBA is a federal resource for small businesses seeking educational or financial support to grow their business.

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