SBA 504

Most businesses, approximately 98%, meet the eligibility requirements for SBA 504 financing. SBA 504 loans are designed to assist growing businesses to finance commercial real estate for their use or to purchase machinery and equipment with a life of 10 years or more.

SEED does not require a loan application for SBA 504 loans. SEED accepts information provided to the participating bank.

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How It Works


SEED was certified in late 1982 by the U.S. Small Business Administration (SBA) to package loans under the SBA 504 Program. SEED packages 504 loans throughout Massachusetts, and most of Rhode Island.

SEED is an SBA Accredited Lender. This designation enables SEED to obtain final SBA approval on 504 loans in three to five business days. SEED is one of the top SBA 504 lenders in the region, and has one of the best turn around times in the nation.

The SBA 504 Program provides: long term, low fixed interest rates; and 90 percent financing for small businesses undertaking real estate or machinery and equipment acquisition; projects can range from $300,000 to $13.75 million or more. Most small businesses are eligible.  For projects smaller than $300,000, SEED can utilize its small loan programs.

How It Works

The SBA 504 Program provides a maximum of 40 percent financing of an eligible project. A lending institution selected by the applicant finances 50 percent of the project and takes first position on the equity. The applicant provides the remaining ten percent. The lending institution’s portion is financed at conventional rates and terms. See loan structure below:

Sample Loan Structure

Participant: Lending Institution (First Mortgage)
Share: 50%
Rate: Prime +
Maturity: at least 7 Years for M & E; at least 10 Years for Real Estate

Participant: SEED 504 Debenture (Second Mortgage)
Share: 40%
Rate: 5-6% Fixed
Maturity: 10 Years for M & E;  20 to 25 Years for Real Estate

Participant: Applicant 10% *
Share: 10%

* 15% for start-up business (less than 2 years in operation), or special purpose building; 20% for both start-up and special purpose.

Loan Amount

SEED’s minimum amount on a 504 debenture is $120,000 (a total project of $300,000). The maximum is $5.5 million for manufacturing businesses and $5 million for all others. On projects smaller than $300,000, SEED evaluates the benefits to the client, and may use its other loan programs.

Eligible Businesses

For-profit corporations, partnerships or proprietorships; industrial, commercial or service businesses; tangible net worth not in excess of $15 million; less than $5 million average net profit after taxes during previous two years.

Eligible Projects

Acquisition of land and buildings; construction and/or renovation; leasehold improvements; equipment and furnishings; refinancing of related project debt up to 50% of new project; interim interest; and professional fees for appraisals, surveying, accounting, engineering and architectural services.

Geographic Coverage

SEED Corporation can package 504 loans throughout Massachusetts and all of Rhode Island (except Washington County).

Job Requirement

SBA requires that the company being financed demonstrate that it will create one job for each $65,000 of SBA investment over a period of two years. In a project of $500,000 with an SBA share of $200,000, the company would have to create three new jobs over a period of two years. The job requirement is often waived when other economic development goals are met.


SEED’s Loan Committee approves loans via email or at a meeting.  Generally, it takes 30 days or less to obtain full approval including the letter of authorization from the U.S. Small Business Administration if the client has the needed preliminary information:

  • A signed Purchase & Sale Agreement, if applicable;
  • Construction cost estimates and/or machinery and equipment invoices, as appropriate;
  • Historical financial statements and IRS returns for 3 years;
  • Interim financial statement no older than 120 days; and
  • Personal financial statements and IRS returns for the last two years for principals with 20% or more ownership.

The SEED Advantage

  • Knowledge and experienced staff in your region;
  • Lower interest rate & fees for your client;
  • Legal fees can be funded;
  • Simultaneous bank closing & SBA 504 closing on turnkey projects;
  • SEED can provide small loans up to $250,000 for over runs or working capital.

SBA 504 Advantages

The 504 Program offers the following advantages:

1. Ninety-percent (90%) financing of the total project costs for commercial real estate purchases enabling business owners to preserve more capital for other uses.

2. Below Market Interest Rates

Businesses can save on interest expenses by obtaining below market, fixed interest rates for 20 to 25 years with the 504 loan program.

3. Less Impact on Cash Flow

By putting in only ten percent (10%) equity and getting below market interest rates versus traditional financing, the business’ cash flow is less impacted while realizing all the advantages of purchasing or constructing commercial real estate.

4. Lower Real Estate Expenses

Owning commercial real estate instead of leasing can lower real estate expenses, and provide the added benefit of converting a large expense into a fixed cost that does not increase as rapidly.

5. Finance Closing and Other Soft Costs

Financing closing and other soft costs with our 504 loan helps keep out-of-pocket expenses to a true ten percent (10%) minimum when business owners make the decision to purchase commercial property and only want to spend the minimum amount of cash necessary in order to preserve more capital for other uses. These costs can be rolled into the 504 loan.

6. No Balloon Payments, Calls or Covenants

No balloon payments, calls or negative loan covenants enable borrowers to have more control, more peace of mind and less lender micro-management.

7. Specialists Make the Process Simple

Dealing with a specialist in 504 loan financing makes the experience of buying commercial property simple and hassle-free. Twenty-four hour pre-approvals and quick commitments are another example of this.

8. Assumable Loans

Future sales of properties financed by our 504 loans are benefited by having assumable mortgages at low fixed interest rates.

9. No Disruption of Existing Banking Relationship

Our 504 loans can be made without disrupting your existing banking relationship because we do not require other banking products or services in conjunction with our 504 loans. We are a non-depository financial institution that only finances commercial real estate and/or equipment; we do not offer other banking products or services.

10. It’s the Overall Best Deal for You

Our program provides small and mid-sized businesses advantages previously only known to much larger enterprises.


One time packaging fees total 2.15% of the SBA 504 loan amount (not the total financing). These fees are rolled into the SBA 504 loan. In addition, there are servicing fees to SEED and SBA. These fees are included in the fixed rate quoted by SEED. SEED’s servicing fees are lower than other 504 lenders. Overall, SEED offers the most cost effective financing.

For more information, please contact a loan officer. download-loan-brochure

SEED is an equal opportunity lender and business assistance provider.

SEED Corporation, 80 Dean Street, Taunton, MA 02780

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