504 Loans

All you need to know about a 504 Loan.

The 504 Loan Program provides long-term, fixed-rate financing with low down payments to businesses. These loans are used to acquire real estate, machinery or equipment for expansion or modernization.

A typical project includes:

  • A loan from a bank or non-bank lender with secured senior lien.
  • A 504 loan from RMI secured with a junior lien covering up to 40% of the total project cost.
  • A contribution of at least 10% from the borrower.

The 504 Loan Program is designed for:

  • For-profit businesses.
  • Start-ups and existing businesses.
  • Owner-occupied businesses.


Can My Bank Work with RMI? 

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

What Information Is Required on a 504 Loan Application?  

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

How Long Does It Take to Get My 504 Loan Application Approved? 

The typical 504 loan approval process takes approximately two weeks.

What Is the Interest Rate and Term on a 504 Loan? 

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, 20, or 25 years.

Can I Use Something Other Than Cash for My Down Payment? 

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. 

How Much Can I Borrow With a 504 Loan? 

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. 

What Are the Advantages of a 504 Loan? 

  • Low Down Payment— Could Be as Low as 10%
  • Fixed Interest— Likely Below Standard Market Rate
  • Long Term— Either 10, 20, or 25 Years
  • Helps Business Preserve Working Capital Since the 504 Loan’s Interest Rate Is Low, Fixed, and the Loan Is for a Long Term

How Is a 504 Loan Deal Structured? 

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.  

Can Other Costs Besides Fixed Assets Be Included in a 504 Loan? 

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

What Is the Maximum Loan You Can Do With a 504 Loan? 

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.


What's Eligible?

  • Businesses that have been in operation 2 years or more.
  • Businesses that meet the 504 program occupancy requirements.
  • Debt that has been in existence for a minimum of six-months that has been secured with eligible fixed assets.
  • Refinancing the same institution or other institution non-federal debt.
  • 90% LTV based on appraised value. Outside collateral can count toward the 90%.
  • Maximum of 85% LTV is cash is taken out for business operating expenses
  • Cash for eligible business operating expenses cannot exceed 20% LTV.