What is an SBA 504 Loan?

The SBA 504 Loan Program provides long-term, fixed-rate financing for small businesses to purchase major fixed assets that promote business growth and job creation. 

The program is administered through Certified Development Companies (CDCs), which are nonprofit organizations certified by the SBA that focus on community economic development.

The typical SBA 504 loan structure involves three parties:

• The borrower (your business) - contributing as low as 10% down payment
• A bank or credit union - providing up to 50% of project costs
• A CDC like Florida Business Development Corporation (FBDC) - contributing approximately 40% through an SBA-guaranteed debenture

This structure allows businesses to finance up to 90% of their project costs, making it an accessible option for Florida small businesses looking to expand.

Key Benefits for Florida Small Businesses

SBA 504 loans offer several advantages over traditional commercial financing:

• Lower down payments (typically only 10%)
• Long-term, fixed interest rates (providing stability in your financial planning)
• Extended repayment terms (up to 25 years for real estate and 10 years for equipment)
• Preservation of working capital for other business needs

Eligibility Requirements

To qualify for an SBA 504 loan in Florida, your business must meet these criteria:

• Be a for-profit business operating in the United States
• Have a tangible net worth under $20 million
• Have a net profit under $6.5 million (after taxes) for the two years preceding your application

Ineligible businesses include:

• Non-profit organizations
• Passive businesses (non-owner occupied)
• Lending institutions and insurance companies
• Gambling businesses
• Speculative businesses (like property flipping)
• Religious and political organizations
• Businesses in default on taxes
• Businesses with prior losses on federal loans (including PPP or EIDL)

Eligible Uses of Funds

SBA 504 loans can be used for:

• Purchasing land or existing buildings
• New building construction
• Modernizing, renovating, or improving existing facilities
• Buying machinery or equipment with a 10-year useful life
• Refinancing existing commercial real estate debt

Ineligible uses include working capital, inventory, broker fees, and bank attorney fees.

Current Loan Terms and Rates (As of April 2025)

Current SBA 504 loan rates as of April 2025:

• 25-Year Debentures: 6.437%
• 25-Year Refi: 6.466%
• 20-Year Debentures: 6.457%
• 20-Year Refi: 6.487%
• 10-Year Debentures: 6.348%
• 10-Year Refi: 6.384%

These fixed rates provide stability for long-term financial planning, unlike variable rates that might increase over time.

Sample Financing Breakdown

For a project with total costs of $1 million:

• Bank or Credit Union: $500,000 (50%), typically with market interest rate and 10-year term
• CDC/SBA: $400,000 (40%), with below-market fixed interest rate and 10, 20, or 25-year term
• Business/Borrower: $100,000 (10%) down payment

The Application Process with FBDC

FBDC, a premier SBA 504 lender in Florida, offers a straightforward 6-step process:

1. Meet with an FBDC Business Development Officer to determine eligibility
2. Underwriting - FBDC's credit team gathers documents and submits for approval
3. SBA Approval - Typically takes about 14 days from submission
4. Loan Closing - Usually 2-3 weeks after SBA approval
5. Loan Funding - About 45 days after closing (unless construction is involved)
6. Loan Servicing - FBDC provides ongoing support throughout the life of your loan

Required Documentation

To apply for an SBA 504 loan in Florida, you'll need to prepare:

• Business and personal financial statements
• Business tax returns (typically 3 years)
• Personal tax returns for all principals
• Business plan (especially important for newer businesses)
• Project cost documentation (purchase agreements, equipment quotes, etc.)
• Entity documents (articles of incorporation, operating agreements, etc.)

Special Programs for Florida Small Businesses

For smaller businesses in underserved communities, FBDC offers a Down Payment Assistance Program that can provide up to 50% of the required down payment, making SBA 504 loans even more accessible.

FBDC also offers the VetLoan Advantage Plus Program, which provides fee reductions for veterans and their spouses:

• FBDC pays half of the Third Party Lender Fee, up to $3,000
• Processing fee reduced from 1.5% to 1.0%

The Florida Business Development Corporation Advantage

FBDC has been serving Florida's small businesses since 1989, establishing itself as one of the most active lenders in the Southeast. 

With over 14 billion dollars in total 504 projects approved and an estimated 76,000+ jobs created, FBDC brings extensive expertise to the loan process.

Their approach is built on three principles:

• Certainty: Reliable support and expert guidance backed by over three decades of experience
• Speed: Quick, efficient processes ensuring financing without unnecessary delays
• Service: Support from application through the life of your loan

Refinancing Options

Recent updates to the SBA 504 program have expanded refinancing options, allowing businesses to:

• Lower interest rates and monthly payments
• Access up to 90% financing
• Secure fixed rates for up to 25 years with no balloons
• Potentially access cash-out options for eligible business expenses
• Consolidate commercial real estate debt

FBDC's Bridge Loan Program

For businesses concerned about timing between approval and funding, FBDC offers the 504 Velocity Bridge Loan Program. This provides bridge financing to cover the second lien loan (typically 30-40% of project cost) before the permanent SBA takeout.

Key benefits include:

• Minimized risk and greater certainty
• Faster funding and project completion
• Competitive bridge loan costs
• Efficient approval and closing processes

Next Steps for Florida Small Businesses

If you're considering an SBA 504 loan for your Florida business, here are the recommended next steps:

1. Evaluate your project needs and financial situation
2. Schedule a no-risk consultation with an FBDC loan officer
3. Begin gathering required documentation
4. Identify potential banking partners (FBDC works with numerous lenders throughout Florida)
5. Develop a preliminary timeline for your project

SBA 504 loans represent an excellent opportunity for Florida small businesses looking to acquire real estate, equipment, or expand their operations with affordable, long-term financing. With loan terms up to 25 years, fixed interest rates, and down payments as low as 10%, these loans provide a stable foundation for growth. 

Working with an experienced CDC like FBDC can streamline the process and help ensure your business secures the funding it needs to thrive.