SBA 504 Loan Program
Bank of Arizona currently offers loans through the following SBA programs - SBA 7(a) and SBA 504. For each type of loan, our bank and the SBA look for these credit criteria: Experience of owners, ability of business to repay debt from earnings, adequate equity capital, collateral value, and personal guarantee of owners.
Benefits to Borrower:
- Longer terms than conventional bank financing
- Low down payment
- Borrower obtains a very competitive fixed rate on up to 40% of the loan amount, which reduces interest rate risk
- Loan is fully amortized during the term of the loan
Purposes of Loan
Term loans to finance long-term assets such as:
- Machinery and equipment acquisition
- Construction or improvement of real property
- Real estate acquisition (owner occupied)
Eligible Borrowers*
- Businesses with a net worth of not more than $7.5 million
- Operating profit after taxes of not more than the average of $2.5 million over the last two years
Loan Amount
We will consider loans of any size; however, the SBA portion of the loan may not exceed $1,500,000 or up to 40 percent of the project cost, whichever is less.
| Minimum cost of project | $125,000 |
| Minimum SBA portion of loan | $50,000 |
| Maximum SBA portion of loan | $1,500,000 |
Loan Structure
- Bank loans 50% of project cost
- SBA 504 loans 40% of project costw
- Borrower provides 10% of project cost
*Certain restrictions apply
Term of Loan
| Bank | Not less than 10 years on real estate
Not less than 7 years on equipment |
| SBA 504 | 10 to 20 years |
Rate of Interest
| Bank | Lender's normal rate, plus lender may charge reasonable fees |
| SBA 504 | Fixed rate of interest, which is usually less than comparable corporate bond rates |
Employer Requirements
One permanent job must be created or retained per $50,000 of SBA debenture dollars. If fewer jobs are created/retained, the project must have a high positive economic impact, approved by the SBA.
*Nonprofit organizations, media-related companies such as newspapers and movie theaters, and speculative ventures including developer-landlord transactions are ineligible to borrow under the SBA 7(a) and SBA 504 loan programs.
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