504 Loans FAQ

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A: Yes. In fact you must have a third-party lender with a 504 loan. RMI can work with any bank or non-bank lender.

A: The 504 loan application asks for basically the same information that a bank requires in a loan application.

A: The typical 504 loan approval process takes approximately two weeks.

A: The interest rate is determined at the time of the 504 loan funding. The rate is typically below commercial bank lending rates and is tied to long-term Treasury rates. The term is 10 or 20 years.

A: The borrower may contribute the equity in land, or the equity may include buildings, structures, or other site improvements that will be a part of the project property.

A: A number of factors will determine how much financing you can obtain. Your RMI representative can help you find out how much financing is available to you.

A: • low down payment—could be as low as 10%
• fixed interest—likely below standard market rate
• long term—either 10 or 20 years
• helps business preserve working capital since the 504 loan’s interest rate is low, fixed, and the loan is for a long term

A: Most 504 projects may be structured "50/40/10". A participating lender provides 50% financing; the 504 loan provides 40% financing and the borrower provides a down payment of 10%. There are circumstances where the borrower will be required to provide a 15% or 20% down payment. Contact your RMI representative to find out the amount required for your down payment.

A: Yes, for example appraisals, environmental report(s), and construction interest, can be financed in the 504 project. In addition, closing costs for the 504 loan may be included in the 504 loan amount.

A: SBA-504 loans can finance up to 40% of the total loan amount, or $5 million, and $5.5 million for manufacturing businesses or those who meet energy goals.