• SBA 504 Loan Program

  • Small Business Financing

    At Lakeshore 504, we can help you find the resources you need to finance your growth. The SBA 504 loan program, administered by Lakeshore 504, provides healthy, small and medium-sized businesses with long-term fixed rate financing for the acquisition or construction of fixed assets. Projects are financed through a unique public/private partnership that involves private lenders financing 50% of the cost, Lakeshore 504 covering 40% of project costs, and the small business investing at least 10% of the project costs.

  • Financing Available: Up to $5 million ($5.5 million in certain situations) per company or 40% of project costs (whichever is less). Use of Loan Proceeds:

    •     Purchase land, purchase or construct building.
    •     Modernize, renovate, or improve building.
    •     Purchase machinery and equipment with 10 year useful life.
    •     Soft costs.
    •     Minimum total project size $150,000.
    •     No maximum total project.
    •     Job creation: one per $65,000 in 504 funds or meeting other economic development goals.
    •     Maximum 504 loan size $5 million, or $5.5 million in certain instances.


    Term of Loan: SBA portion: 10 or 20 years based upon economic life of assets. Private Lender: at least 10 years on real estate and at least 7 years on equipment and leasehold improvements.

    Rate of Interest: Approximately 1 - 1 1/2% above 5 and 10 year Treasury Note, respectively, on the SBA portion. Private Sector Lender--first mortgage to be made at market rate determined by private lender without SBA restriction.

    Down Payment: At minimum 10%. Start-up businesses require a 15% down payment. (Special purpose buildings -- add an additional 5%).

    Typical Structure:

    First Mortgage - *50%
    504 Debenture - 40%
    Local Injection - 10%
    Total 504 Project Cost - 100% *In any 504 loan, 50% of project costs must be private sector (i.e. Non-Federal guarantee or direct dollars). State dollars count as private sector match.


    The Process: SBA authorization 19-21 days after lender commitment. Lakeshore 504 works directly with SBA and facilitates approval.

    Collateral: Generally a lien on all fixed assets purchased with loan proceeds. First mortgage--private lender. Second mortgage -- SBA.

    Guarantees: It may be requested that life insurance, equivalent to the amount of the debenture, be taken on the key borrower, especially in the case of a sole proprietorship. Personal guarantees are required on all individuals with 20% or greater ownership.

    Eligible Businesses: Operating, for profit businesses.

    Ineligible Businesses:

    •     Passive income companies
    •     Real estate companies
    •     Developers/Landlords
    •     Financial institutions
    •     Unregulated media firms
    •     Not-for-profit businesses


    Job Creation Criteria: $65,000 of SBA 504 funds per one job either created or retained.

    Fees: One-time costs amounting to approximately 2.65% of the SBA portion (can be capitalized as part of the loan). Closing costs of $3,500 are also incorporated into the loan. The borrower is, however, responsible for any out-of-pocket costs, which typically run between $500 and $1,500.

  • February Interest Rates

    20 Year Loan Rate - 4.60%

    10 Year Loan Rate - 4.59%