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Small Business

The Economic Development Corporation is a Certified Development Company for SBA 504 Loan financing. The SBA 504 Loan Program is designed to assist existing and new businesses to finance fixed assets such as land, building, machinery and equipment. This program offers subordinated mortgage financing from the SBA for 40% of a project's costs pared with long-term financing provided by the participating bank (50%) and a low down payment from the borrower (usually 10%) to reach a reasonably priced package loan. The SBA 504 program financing is one of the most attractive and cost effective methods to finance commercial and industrial business expansions.

ADVANTAGES

The 504 program provides longer term, attractive rates matching the maturity of the loan to the useful life of the assets financed. As a result, debt service more closely matches the cash flow generated by the assets. This program allows the borrower to put less into a down payment thereby enabling the business to retain working capital to finance inventory and receivables. SBA financing also reduces the bank's credit and collateral risk by assuming a subordinate position to the other project lenders on assets financed.

QUALIFYING PROJECTS AND BUSINESSES

Projects involving the purchase, construction, renovation or improvement of capital assets are eligible. This includes fixed assets such as the acquisition of land and buildings; construction and/or renovations; equipment and furnishings. Soft costs such as interim interest, professional fees for appraisals, surveying, accounting, engineering, and architectural services may also be included.

For example, land, building acquisition, new construction or renovating and the purchase of equipment and machinery with a minimum of 10 years of useful life, are eligible costs. Many contingencies and soft costs, as well as, some furniture and fixtures may be included. Investment and residential construction projects are not eligible. Working capital may not be included in the project.

Qualifying businesses also include developers, landlords or other eligible passive concerns (EPC) that lease, loan or rent the project to their own operating company (OC). In such instances, the EPC and OC co-borrow or co-guarantee the loan with the lease directly between the EPC and OC. All owners with 20% or more ownership must personally guarantee the loan. The lease is subordinate to the SBA loan, and the EPC assigns rents (cannot exceed debt service plus maintenance).

Click here for EDC 504 Application 

 

CUSTOMER IDENTIFICATION PROGRAM REQUIRED BY THE SBA PURSUANT TO THE USA PATRIOT ACT 

NOTICE:    Important Information About Identification Procedures When Obtaining A SBA 504 Loan

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all Certified Development Companies to obtain, verify, and record information that identifies each person who applies for a SBA 504 Loan.

What this means for you:  When you apply for a SBA 504 Loan, we will ask for your name, address, date of birth, and other information that will allow us to identify you.  We may also ask to see your driver's license or other identifying documents. 

 

FREQUENTLY ASKED QUESTIONS

 What is a typical 504 loan structure?  

The typical 504 loan is 50% bank financing, 40% SBA 504 funds and 10% borrower investment. Start-up businesses and special purpose buildings may require additional borrower funds.

Do I have to have collateral?

Yes, you do. A lien will be put against the property with the bank always in first lien position. If machinery is used as collateral, UCC filings will be recorded with the Missouri Secretary of State.

How long does it take for loan approval?

Loan approval averages 30-45 days once we have a complete package including required documentation from the borrower.

How long does it take to get Authoization from the SBA?

The maximum time to get final authorization form the SBA is 30 business days. Average time is usually 15 days if all documentation is present.

How long do I have to close my loan?

An authorization is good for four (4) years

How much will this loan cost me up front?

The EDC does not require a deposit to process a 504 loan. 

If I have any questions, who do I call?

For more information, call our main line (636) 797-5336.

 

Take advantage of the Blogs on the SBA website for free information and business tips.

SBA Blogs 

How to Increase Your Credit Score 

How to Have A Stand Out Business Credit Application