SBA 504

This program has a lower owner investment requirement, long payment terms (20 years), projected income is considered and not just historical cash flows, and collateral may be less critical in loan qualification decisions. In addition, up to 40% of the eligible project costs may be financed with a longer term, normally below-market, fixed-rate loan.

SBA News & 504 Rates

504 Loan Application

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SBA Loan Programs

SBA 504 Loan

The 504 Program is an under-utilized economic development program. It stimulates private sector investment, increases productivity, creates and retains jobs and increases local tax base. This program helps small businesses overcome the obstacles normally associated with traditional loan criteria. The SBA’s involvement spreads the lending risk and thereby recruits private sector lenders to participate in projects they wouldn’t otherwise be involved in.

The South Central Kansas Economic Development District, Inc. (SCKEDD) serves a 14-county region in South Central Kansas. The Wichita Metropolitan Area is the heart of the region that includes Butler, Chautauqua, Cowley, Elk, Greenwood, Harper, Harvey, Kingman, Marion, McPherson, Reno, Rice, Sedgwick and Sumner counties.

Typically, a 504 project includes:

  • A loan secured by a first lien from a private-sector lender that finances up to 50% of an eligible project’s cost.
  • A secured second lien from a CDC (backed by a 100% guaranteed debenture) that funds up to 40% of the project’s cost.
  • The small business is required to inject at least 10% of the eligible costs. New and limited purpose businesses may be required to inject additional equity up to a maximum of 20%.


To be eligible for the SBA 504, you must:

  • Be an operating business
  • Be organized for profit
  • Be located within the United States
  • Be a small business according to SBA standards
  • Meet an economic development objective of the program
  • Have demonstrated the need for financing
  • Not have credit available elsewhere

Projects Financed

A 504 loan can be used for:

  • The purchase of land, including existing buildings
  • The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
  • The construction of a new facility or modernizing, renovating or converting existing facilities
  • The purchase of long-term machinery and equipment

Loan Amount

The maximum loan amounts are determined by how funds will be used based on which goal they support from the list below:

  • Job Creation – The maximum SBA debenture is $5 million for meeting the job creation criteria or a community development goal. Generally, your business must create or retain one job for every $65,000 provided by the SBA except for small manufacturers, which have a $100,000 job creation or retention goal. (see below)
  • Public Policy – The maximum SBA debenture is $5 million or $5.5 million for small manufacturing or when meeting the public policy goals of energy reduction or alternative fuels. Some examples include: expansion of minority business development, rural development, expansion of small business concerns owned and controlled by women and veterans.
  • Small Manufacturing – The maximum debenture for a small manufacturer is $5.5 million.A small manufacturer is defined as a company that has its primary business classified in sector 31, 32 or 33 of the North American Industrial Classification System (NAICS) and all its production facilities located in the United States.

Interest Rate and Repayment

  • Fixed rate indirectly based on prime and set when debentures are sold to the public.
  • Fully amortized 10 years on equipment only loans or 20 year loans for real property loans.


  • Generally, the project assets being financed are used as security. SBA 504 loans are secured by a second lien on project assets (Land, Building, Machinery and Equipment).
  • Participating private sector lenders are granted a first lien on project assets.
  • Personal guarantees and assignable key-person life insurance policies on the owners of the business are required.

For More Information Contact:

Christie Henry, Lending Program Manager
9730 E. 50th Street N.
Bel Aire, KS 67226