SBA 504 Loan Limits: What You Need to Know
Technically, there are no actual loan limits placed on the SBA 504 loan. That is, the SBA does not limit the amount of money that you can borrow from a conventional lender in this scenario. However, the portion sourced from the CDC is limited to just 40% of the total amount and it cannot exceed $5 million (or $5.5 million for small manufacturing companies).
The structure of the loan, up to the $5 million/$5.5 million contribution cap is as follows:
Conventional Lender/First Lien: 50% of the loan total
CDC/Second Lien: 40% of the loan total
Borrower (you): 10% of the loan total
Note that the loan does not have to total $5 million initially. You can take out subsequent 504 loans in order to reach the $5 million cap. However, once you reach the cap, that is the lifetime limit available to your business through the 504 program. There are other options available if you still need capital, though.
The SBA 504 Green Energy Program Allows Borrowers to Take Out Multiple Loans
While most SBA 504 loan borrowers are limited to taking out just $5-5.5 million, the SBA 504 Green Energy program allows borrowers to take out $5.5 million per project, with an unlimited number of SBA 504 loans per business. In order to qualify for the program, a business must either purchase or build a new building that uses at least 10% less energy than their previous building. Alternatively, they can choose to generate at least 10% of their current energy use from a renewable source, such as solar or wind energy. Businesses can also purchase the building they are currently leasing and make upgrades that reduce its energy usage by 10%.
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