• Organized as a for-profit business.
• Legal entity-corporation, partnership, sole proprietor, limited liability company.
• Any type of legitimate business- manufacturing, wholesale, service, professional service or retail. See prohibited businesses.
• Located in or planning to locate in any area of the United States.
• Small business - either: net worth under $7 million & net profits after taxes under $2.5 million or meet SBA's other size standards (by sales or number of employees depending on NAICS code).
• Planning to use the loan proceeds for capital investment (land, building, leasehold improvements, renovation, construction, machinery & associated soft costs). The SBA 504 loan program is not a working capital program. See uses of loan proceeds section for more details.
• Another lender must be willing to participate in the financing. The SBA 504 loan finances up to 40% of the total project cost and the other lender finances 50%. The business or its owner typically puts in 10%. Economic development goals must be achieved through the project being financed. See section on economic development requirements.
• Owner-user of the project being financed (51% occupancy if existing building; 60% occupancy if new construction) Two or more unrelated small businesses may receive a 504 loan to buy or construct a building as long as they, together, will occupy at least 51% an existing building or 60% of new construction.

• Acquisition of vacant land
• Acquisition of land and building
• Leasehold improvements
• Renovation of building; addition to building
• Construction of a building
• Acquisition of a commercial fishing vessel or party boat
• Acquisition of heavy duty machinery & equipment (such as printing press)
• Associated soft costs: title searches & insurance; attorneys fees; appraisals; environmental reports; architects; permits;surveys; installation of machinery; points on bridge loans, small amount of furniture and fixtures, etc.
• Not permitted are mortgage broker fees; points on permanent financing;moving expenses.
• Refinancing is not permitted except to take out financing on property acquired within last 9 months with interim funds.

1) Job creation or retention (one job per every $50,000 borrowed from CVC under SBA 504)

OR

2) One of the following public policy goals to:

• Revitalize a business district of a community with a written revitalization or development plan
• Expand exports
• Expand minority business development (owned 51% or more by minority business person)
• Change necessitated by federal budget cutbacks
• Change required by mandated standard re health, safety, environment
• Increase productivity & competitiveness (retooling, robotics, or modernization)
• Expand woman-owned business development
• Expand veteran-owned business development

One of the following community development goals to:

• Help to improve, diversify or stabilize the economy of the locality
• Stimulate other business development in the community
• Bring new income into the community
• Assist manufacturing firms
• Assist businesses in a labor surplus area.

SBA 504 is not a real estate investment tool. It exists to help the community by helping small business have an impact on the community-by creating jobs or in other ways benefiting the community.

• the project will help revitalize a business community with a written revitalization plan or

• the project will help your company to expand its exporting or

• your company is 51% or more minority, woman or veteran owned or

• you are in a rural area or

• the project will increase productivity and competitiveness by retooling, modernization or assistance in competing with imports or

• your business was affected by federal budget cutbacks (such as defense downsizing).

Loans are ten or twenty years; self liquidating. In order for CVC to do a 20-year loan, the lender doing the 50% permanent first mortgage must have at least a ten year term. That lender can have a longer payout. Typically, lenders will lend with a 15-20 year term and 20-year payout. For CVC to do a ten-year loan, the 50% lender must have a term of at least 7 years. Many lenders will match CVC's ten year term.

• Owners must be US citizens or registered aliens with green card.

• Owners cannot be convicted felons currently on probation.

• Anyone who owns 20% or more of the operating company must personally guarantee (unsecured general guarantee).

• Liquid assets of the principals are taken into account in determining eligibility. Too much liquid assets owned by a principal could disqualify the loan because it will be deemed that the project could be financed by the principal without SBA 504 assistance.

Payments on the SBA 504 loan are made by ACH debit to the borrowers designated checking account on the first of each month after the loan closes. Payments on the 504 loan are separate from your payments on the 50% first mortgage loan.

The Certified Lender is a permanent lender only. This means the 50% first mortgage lender will have to bridge the Certified Lender's 504 loan portion until the project is complete. The Certified Lender will sell its bond and fund its loan when the Certificate of Occupancy is issued. Interest and fees on the bridge loan can be included in the project costs to be financed.

• 3 years of financial statements and federal tax returns on the company (if in existence for 3 years);

• if there is no historical cash flow ability to service the proposed new debt, submit 2-3 years financial projections;

• personal financial statement (assets and liabilities) on the owners of the company;

• written history of the business, reasons for expansion, plans;

• copy of contract of sale; appraisal; construction cost estimates;

• personal history statement of principals indicating citizenship status, etc.

CVC's staff will investigate and evaluate you and your company. CVC will draw credit reports, do supplier, bank and trade checks, visit your existing and proposed operations/facilities; assess your credit ability and character. Once your bank or other 50% first lien lender has indicated an interest in financing the 50%, CVC staff prepares a loan memorandum and presents it to the CVC Board. Once the board approves the project, CVC presents the application to the SBA to acquire its agreement to guarantee the bond. This generally takes a few days. CVC then issues a commitment and your bank closes its first mortgage loan and bridge loan. You take the bank's funds to complete the project. When the project is complete, you close with CVC and CVC wires its money to the bridge lender. You then pay CVC back for the SBA 504 loan. CVC services the loan for its life.

Low downpayment. Just 10%. Lets you preserve your cash for your working capital. Most banks will lend only 60-70% of the appraised value of the project leaving you to sink in 30-40% plus the cost of renovations plus the soft costs.

Fixed rate on the SBA 504 portion. You don't have to worry about the prime lending rate going up. You can plan because you know the amount of your mortgage payments for the next 20 years.

Long term. 504 loans are for 10 or 20 years. Because CVC is in second lien position, the bank or other lender doing the 50% first lien loan are willing to lend at a longer term. Longer terms make your monthly payments lower.

Low interest rate. Low fixed interest rate for the term of the loan.