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SBA & Other Loan Programs

The United States Small Business Administration (SBA) offers a variety of loan programs for very specific purposes and with very explicit qualifications.  The attorneys and staff of FLG work closely with many local and national banks and non-bank lenders with regard to these SBA programs, particularly the 7(a) and 504 loan programs, as well as the other following government guaranteed loan programs:

  • U.S. Department of Agriculture (USDA) loans
  • Florida Recycling loans
  • Florida Export Finance Corporation loans
  • Florida New Markets Tax Credit loans

There are many factors to consider when deciding whether to participate in an SBA or other government guaranteed loan program.  And, because of the special purposes and qualifications of these programs, there are often challenges in getting the loan closed.   Having handled and closed numerous loans involving these programs, the Firm is extremely knowledgable and exceptionally qualified to assist its lender and borrower clients with transactions under any of them.  How can FLG help you with your SBA or other government guaranteed financing?

SBA 7(a) Loans

The 7(a) Loan Program includes financial help for businesses with special requirements. Some examples for which 7(a) loan proceeds may be used include:

  • to establish a new business or to assist in the acquisition, operation, or expansion of an existing business;
  • to purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities;
  • to purchase of equipment, machinery, furniture, fixtures, supplies, or materials;
  • for working capital needs;
  • for handling exports to foreign countries; and
  • for businesses that operate in rural areas.

Remember that there are very specific eligibility requirements and conditions that must be satisfied to be awarded an SBA 7(a) loan.  Please contact the Firm or visit the SBA website at www.sba.gov for more information regarding loan amounts, use of funds, and other terms.  To learn more, click on our SBA Frequently Asked Questions page.

SBA 504 Loans

The 504 Loan Program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.  Typically, a Project which uses the 504 Program includes:

  • A loan secured from a private sector lender with a senior lien covering up to 50% of the cost of the Project;
  • A loan secured from a Certified Development Company (CDC) (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40% of the cost of the Project; and
  • An equity contribution from the borrower of at least 10 percent of the cost of the Project.

This type of setup means that 100% of the cost of the Project is covered either by contribution of equity by the borrower, or the senior or junior lien.  Proceeds from 504 loans must be used for fixed asset projects, such as:

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

The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or, with some exceptions, refinancing. 

The 504 Loan Program uses the services of a CDC, which is an entity established under the 504 code as non-profit corporations set up to support economic growth in their local areas.  The Firm has excellent working relationships with many CDC’s around the country, including those in Florida.

As with 7(a) loans, there are very specific eligibility requirements and conditions that must be satisfied to be awarded an SBA 504 loan.  Please contact the Firm or visit the SBA website at www.sba.gov for more information regarding loan amounts, use of funds, and other terms.  To learn more, click on our SBA Frequently Asked Questions page.