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Did You Know? Larger and Multiple SBA 504 Loans Available for Green Initiative and Small Manufacturing Projects

Sep 2014

Under the Small Business Administration (SBA) 504 Loan Program, a qualified small business borrower normally is eligible for up to a maximum of $5 million for the SBA second mortgage portion of standard and public policy 504 projects. Once this lending limit is met, the borrower may not receive additional SBA second mortgage funds until the debt is satisfied.

However, small business owners with green initiative or small manufacturing projects may be eligible for increased SBA second mortgages of up to $5.5 million per project under the program.

There is no limit on the number of SBA 504 green initiative or small manufacturing projects allowed to each borrower, which means that business owners looking for additional 504 financing may be eligible even if they have committed or outstanding SBA loans.

Funds for this program are not limited by the SBA's usual aggregate lending limit of $5 million per borrower, which means business owners that previously reached their SBA maximum have the ability to receive additional loans.

Additionally, there is no limit on the amount of the 1st mortgage of a 504 project and therefore no maximum project size. In many cases, qualified borrowers with projects exceeding $20 million can still obtain up to 90% financing at below-market fixed interest rates with terms up to 20 years for the purchase of owner-occupied commercial property and/or fixed heavy duty machinery and equipment.

To qualify for increased SBA second mortgage amounts on a per project basis, green initiative projects must reduce energy consumption by at least 10% or generate at least 10% renewable energy. A reduction in energy consumption can be achieved through the use of improved insulation, lighting, HVAC systems (heating, ventilation and air conditioning) and energy efficient windows as well as renewable energy sources, such as solar, wind, turbine and thermal systems. Renewable energy includes plant, equipment and process upgrades of renewable energy sources (solar, wind, turbine, thermal) used to run a facility or renewable fuel producers, including bio-diesel and ethanol producers.

For small manufacturing projects to qualify, a small manufacturer must have fewer than 500 employees and meet the definition of a small to mid-sized manufacturer as classified in sector 31, 32, or 33 of the North American Industry Classification System (please visit http://www.census.gov/eos/www/naics/ for specifics). Additionally, all production facilities must be located in the United States.

Remember that even with the larger debenture sizes, the 504 loan applicant must be considered a small business defined as follows: for-profit, owner-occupied, credit worthy businesses located in Florida with a maximum tangible net worth of not more than $15 million and average net income after Federal income taxes (excluding carry-over losses) for the two full fiscal years prior to application of not more than $5 million.

For more information about SBA 504 loans in Florida,contact a Florida First Capital Loan Officer hereor email us atinfo@ffcfc.com. Phone: 850.681.3601 or toll-free at 888.320.5504.