Current All-In Rates: 5.59% (10-year), 4.92% (20-year), and 4.99% (25-year)
Rappahannock Economic Development Corporation

504 Loan Program Overview

The 504 Loan Program was established by Congress in 1987 to encourage healthy businesses to expand and create job opportunities within their communities. With a lower down payment of typically 10% and below market interest rates, the business retains their hard earned working capital to fuel and sustain growth.

The SBA 504 Loan Program provides businesses with financing for major fixed assets such as office buildings, retail buildings, warehouse facilities, machinery and equipment. The 504 Program is the best low down payment (typically 10%), long term, fixed rate loan option for your business.

The 504 Loan Program allows for up to 90% financing of the total project costs and involves three participants:

The Bank, which provides 50% financing at market rates and terms that are negotiated between the small business and the bank.

REDCO, which provides up to 40% financing (capped at $5 million, and up to $5.5 million in certain industries) at a low fixed rate for 20 years. This is the SBA-guaranteed 504 loan.

The Small Business, which provides the minimum down payment of 10% (15% if a start-up with less than 2 years of operations or if the property is considered single use, such as a gas station).

Project Example:

Project Costs Project Funding
$1,000,000.00 Purchase Building 83.33% $600,000.00 Bank 1st Trust Loan 50.00%
$150,000.00 Building Improvements 12.50% $480,000.00 REDCO/SBA 504 Loan 40.00%
$30,000.00 Furniture and Equipment 2.50% $120,000.00 Borrower Injection 10.00%
$20,000.00 Eligible Closing Costs & Fees 1.67% $1,200,000.00 Total Project Funding 100.00%
$1,200,000.00 Total Project Costs 100.00%