SBA 504 Loans: Why You May Not Qualify and How to Secure Approval 

SBA 504 Loans: Why You May Not Qualify and How to Secure Approval 

Every business owner or aspiring business owner needs funds to grow and thrive. Among the funding solutions to consider are SBA 504 loans. 

What Are SBA 504 Loans? 

SBA 504 loans are loans that are made available through Certified Development Companies (CDCs). CDCs are the SBA’s certified and regulated community-based partners who promote community economic development. These loans provide long-term financing of up to $5 million for major fixed assets such as commercial real estate, heavy machinery, or equipment that promotes local business and job growth.  

To Qualify for One of These Loans, a Business Must: 

  • Operate as a not-for-profit company in the United States.  
  • Acquire a tangible net worth of less than $15 million. 
  • Have an average net income of less than $5 million, after taxes, for two prior years. 

If These Qualifications Are Met, an Applicant May Still Not Qualify if He/She Has: 

  • Poor credit. 
  • No collateral or cash to put into the business concept. 
  • Financial assets but chooses not to use them. 
  • Previously defaulted on a government loan. 
  • A criminal record. 

To remedy qualification problems, an applicant should work hard to improve his/her credit score, secure additional collateral, and clear up any criminal history. 

Other Funding Solutions to Consider 

Beyond SBA 504 loans, are these funding solutions to consider: 

  • An SBA 7a loan can be used much more broadly than an SBA 504 loan to purchase a business, get working capital, hire employees, purchase furniture and fixtures, buy supplies, and other uses. 
  • Traditional commercial loans acquired from a bank or a credit union. 
  • Business line of credit. 
  • Credit card financing. 
  • Online lenders. 
  • Alternative lenders. 
  • Venture capital investors. 

These funding sources typically require a good credit history and a well-developed business plan. 

Seek Expert Financing Assistance 

Contact Atlas Capital Solutions, based in Pittsburgh, PA for expert financing solutions. Our team of seasoned professionals helps businesses and entrepreneurs navigate the alternative financing landscape to get the funding that you need.