Corporately based in Toledo, OH, Aspire Funding Group has grown into one of the leading sources for SBA Commercial Mortgages such as SBA 7a Loans and SBA 504 Loans in Ohio, Michigan, and Indiana and has expanded to offer its SBA Loan products on a nationwide basis. We are providing the information below so you can become better informed about the SBA Loan products and process. If you have any further questions about SBA 504 Loans or SBA 7a Loans or you would like a Free consultation with one of our SBA Commercial Mortgage specialists, please Call or Contact us today.  

The Small Business Administration's SBA 504 loan program was created to help small to mid-sized business owners acquire commercial property without the financial hassles. While this SBA Loan program is less-used and very little understood, in order to qualify, over half (51%) of the property must be occupied by the borrowers within one year of ownership. To qualify for the SBA 504 Loans program, U.S. citizens or permanent residents must hold a majority of the ownership of the operating companies and the holding company.

An SBA 504 Loan project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business owner.

Proceeds from a 504 SBA loan must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment. The SBA 504 Loan Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing

Interest rates on 504 SBA loans are pegged to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Maturities of 10 and 20 years are available. Fees can range between one (1) and three (3) percent of the debenture and may be financed with the loan.

The project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.

To be eligible for an SBA 504 Loan, the business must be operated for profit and fall within the size standards set by the SBA. Under the SBA 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

As specified by our Underwriting SBA Lender, the following is a basic list of when a borrower is eligible and/or ineligible for the SBA 504 Loan product.

SBA 504 Loans: Eligibility Qualifications for the SBA 504 Loan Program

Eligible Borrowers:

• For-profit, non-publicly traded businesses.
• Tangible business net worth (including affiliates) not to exceed $7.0 million.
• Average net income of the business not to exceed $2.5 million over the previous two years.
• Personal liquidity of each principal/guarantor not to exceed the total project costs of the proposed 504 loan.
• Ownership must be comprised of 51% U.S. citizens or resident aliens (Legal Permanent Residents).

Ineligible Borrowers:

• Non-profits (except sheltered workshops).
• Passive holders of real estate and/or personal property.
• Lending institutions (mortgage brokers and correspondent lenders are eligible).
• Life insurance companies (however, franchised agents are eligible).
• Businesses located in a foreign country or owned by aliens.
• Businesses selling products/services through a pyramid plan.
• Illegal businesses.
• Gambling concerns.
• Businesses which restrict patronage.
• Government owned entities (excluding Native American Tribes).
• Businesses engaged in promoting religion.
• Consumer and marketing cooperatives (producer cooperatives are eligible).
• Businesses engaged in loan packaging.
• Businesses owned by persons of poor character.
• Businesses providing prurient sexual material.
• Businesses that have previously defaulted on a Federal loan.
• Businesses engaged in political or lobbying activities.
• Speculative businesses.

If your business does not match any of the Ineligble Criteria, or if you have any questions about the ineligible list, please feel free to call us at 866-966-1944 and one of our SBA Loan specialists will be happy to discuss your funding needs.

Ineligible Use of Funds: (If you believe your company is eligible for a 504 SBA Loan but you need funds for any of the following, talk with us about possibly using an SBA 7a product)

• Refinancing (unless debt has been in place for less than 9 months)
• Working capital.
• Inventory.
• Rolling stock.
• Business "good will" (common in business acquisition financing).

1. Toledo, OH based Aspire Funding Group will work with the borrower to help them understand the SBA Loan process with a personal touch while keeping close communication on the progress of the loan. We are entrepreneurs, so we know how frustrating this process can be, we've been in your shoes.
2. Our SBA 504 lender can extend Ninety Percent (90%) Financing of the total project costs for qualifying commercial real estate purchases.
3. Business owners can save on interest expenses by not accepting market interest rates when below market, fixed interest rates are available with this SBA 504 loan program.
4. Longer loan amortizations allow for smaller monthly payments, which have less impact on business cash flow. Furthermore, since prepayments are always allowed (generally up to 20% of the principal balance during the first ten years), business owners can have the best of both worlds; smaller monthly payments for when times are tight, but able to prepay when excess cash is on hand.
5. When the business owner puts in 10% equity, they are able to get below market interest rates and longer loan amortization versus traditional commercial mortgage lending. This means that the business owner has more cash flow to work with.
6. There are benefits to owning commercial real estate instead of leasing. Owning typically has an immediate reduction of up to forty percent (40%) on real estate expenses.
7. Financing closing and other soft costs with our SBA 504 loan helps keep out-of-pocket expenses to a true ten percent (10%) minimum in order to preserve more capital for other uses.
8. No balloon payments, or calls enable borrowers to have more control, more peace of mind.
9. Closing in as little as 45 days allows business owners to take possession of their new asset and start reaping the advantages.
10. Our SBA 504 Lender does not require your use of their banking products or services in conjunction with the SBA 504 loans. Our SBA lender is a non-depository financial institution.

As specified by our SBA 504 Lender, the following is an explanation of each portion of an SBA 504 Loan.  Below that are examples of SBA 504 Loan Project Costs and Loan Structures provided by our SBA lender:

Project Cost and Structure Example:

SBA 504 Loan Structure Example:

The following is a detailed comparison of the two largest SBA financing programs.

Informational SBA Loan and SBA 504 Loan Resources

• 504 SBA Loan Program
• National SBA Business Start Up Guide
• The Franchise Registry
• Federal and State Grant Resources
• Association of Small Business Development Centers
• SCORE