If you are planning to grow your small business or starting business, Small Business Administration Guaranteed Loans (SBA Loan) would be your best option. The Small Business Administration (SBA) is a United States government agency which provides support to entrepreneurs and small businesses. The SBA provides a government-backed guarantee on part of the loan, and Shinhan Bank America is currently participating as a PLP (Preferred Lenders Program) Lender. Under PLP program, SBA delegates the final credit decision and most servicing and liquidation authority and responsibility to PLP lenders.
SBA 504 Loan Program (SBA Loan)
SBA 504 Loan program is designed to provide financing for the purchase of fixed assets, which usually includes commercial real estate, buildings, machinery/equipment at below market rates. The 504 program works by distributing the loan among three parties, the business owner that puts a minimum of 10%, a lender that puts up 50% and a Certified Development Company (CDC) that puts up the remaining 40%. Certified Development Companies are non-profit corporations which exist to support economic growth in their local areas. The maximum amount of the loan is $5 million.
In order to be eligible for SBA 504 Loan program, the applicant must meet the following criteria:
- The borrower must plan to use over half (51%) of the property for its own operations within one year of ownership.
- U.S. citizens or permanent residents must hold a majority of the ownership of the operating companies and the holding company.
- A business’s average net income cannot exceed $5 million after tax for the preceding two years
- The expected project size must be greater than the personal, non-retirement, unencumbered liquid assets of the guarantors/principals
- A business cannot have a tangible net worth in excess of $15 million