SBA 504 Loan

What kind of loans does Mid-State provide?

As a Certified Development Company (CDC), we specialize in providing 504 loans on behalf of the U.S. Small Business Administration to the community of Kern County.

What is a 504 Loan?

The U.S. Small Business Administration enables growing businesses to secure long-term, fixed-rate financing for major fixed assets through the 504 Program. The program can be used to purchase long-term fixed assets, such as: land, buildings, machinery, and equipment. These assets must be used principally to enable the business to create or retain jobs.

Why a 504 Loan?

Growing businesses have big plans, big ideas, and big needs. When a conventional loan is not possible, a 504 loan may be the answer. A CDC can help by making you a loan through SBA 504 loan program. You put only 10% down on the entire project (15% for a start up or special purpose building and 20% for a start up AND special purpose building). All project costs are included: land, building, renovation costs and soft costs. The loans are long term and provide a low fixed interest rate. The SBA 504 program can even finance the machinery you need to buy.

How does 504 financing work?

The SBA 504 loan finances up to 40% of the total project cost and another private lender finances 50%. The business or its owners puts in 10% (as noted above-15% for a start up or special purpose building and 20% for a start up AND special purpose building). As a result of the financing configurations, the private lender takes the first position on the collateral while the SBA takes the second position.

What kinds of terms are available?

A 504 Loan offers terms of 10, 20, and 25 year options.

What kinds of businesses are eligible?

You must be organized as a for-profit business. The only not-for-profit companies eligible for SBA 504 are sheltered workshops. Additionally, you must be a small business: net worth under $15 million & net profit after taxes under $5 million or meet SBA's other size standards (by sales or number of employees, depending on SIC/NAICS code.)