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Small, expanding businesses can get more money as SBA raises loan limits
The U.S. Small Business Administration is raising the ceilings on the worth of companies it is willing to finance under its 504 loan program.
Beginning August 18, companies with a net worth of up to $8.5 and as much as $3 million in annual earnings may borrow from the SBA 504 program. The loans are provided by the SBA, local lenders and certified development companies such as the Indiana Statewide Certified Development Corporation.
"With a minimum project size of $125,000, the SBA 504 loans have always been focused on small companies," says Jean Wojtowicz, executive director of the Indiana Statewide CDC.
"Raising the net worth ceilings allows the program to reach more companies, but it also recognizes that companies we've helped succeed can still qualify for the 504 program as they continue to grow."
Congress created the SBA 504 program to help small businesses gain favorable financing terms and retain operating cash while expanding. Companies buy real estate, buildings and equipment with SBA 504 financing. In 25 years, the Indiana Statewide CDC has helped create or save more than 26,000 jobs in Indiana with SBA 504 loans. A recent national study of the program said borrowing companies return $94 in tax revenue for every $1 of SBA 504 funding they receive.
"SBA 504 loans work because borrowing companies may pay as little as 10 percent down and can gain a low, fixed interest rate for as long as 20 years," says Wojtowicz. "The SBA guarantees bonds that are sold to finance a portion of the loan so we can offer loan rates that are more favorable than conventional financing."
The Indiana Statewide CDC is the leading 504 provider in Indiana, and its loan volume annually places it among the top 10 percent of 504 lenders in the U.S.
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