The Step-By-Step Guide to Easy SBA 504 Loan Applications

step by step guide to the application processSo you know about what the Small Business Administration (SBA) 504 loan can do for you. The question still remains: how to go about getting one? With limited and often outdated information about the SBA 504 loan application process online, this can be tricky to figure out.

TMC Financing has put together a step-by-step guide to the 504 loan application process for just this reason. While every loan will vary slightly based on the needs of the individual business owner, the steps are simple and straightforward.

First Steps in Completing a 504 Loan Application

  1. Find A Loan Expert. A Certified Development Company (CDC) is a nonprofit organization set up to administer the 504 loan program. A CDC does not issue loans, but its loan experts guide you through the application process and submit your application to the SBA on your behalf. If your CDC is a Premier Certified Lender, like TMC Financing, they will have increased authority to make approval decisions to meet your most pressing deadlines.
  2. Get Prequalified. One of the most important steps you can take occurs before you even begin preparing your loan application: prequalification. Your CDC will look at three documents—three years of your personal and business tax returns, a personal financial statement, and interim financials.—confirm your eligibility, and estimate the size of the loan you can receive and the down payment you will need. Prequalifying saves time later when you apply for a 504 loan, and gets you the most important information as quickly as possible. At TMC, prequalification takes no more than 48 hours to see your results, and sometimes as little as 18 hours.
  3. Finalize The Terms And Complete The Loan Application. Once you have prequalified and identified your desired purchase, or have even entered into a purchase-sale contract with a seller, you can finalize the terms of your 504 loan and sign the application. Your contract will probably have a Financing Contingency clause that allows you time to get your financing approvals in place. It is very important that your broker and CDC are aware of the window of time you are working with. TMC is dedicated to meet your closing deadlines.
  4. Secure A Conventional Lender. At this point, it is time for you to secure a conventional lender to partner with you on your 504 loan. Conventional lenders (banks or credit unions, for example) will provide 50% of the total project cost and have first lien position. The conditions on that loan will be determined by you and that lender. If you do not have a conventional lender, consult with your CDC. TMC Financing is always happy to help borrowers find the best lender for their unique project.

You can expect a down payment of 10-15% of the total project cost, depending on the type of business you have. The remainder of the amount will be your 504 loan. The loan will be at a fixed, below-market rate, fully amortized (no balloon payment), with a 10- or 20-year term. A 25-year term will be available beginning in 2018 as well.

What Happens After You Get Your Loan?

After you have prequalified, signed your loan agreement and partnered with a conventional lender, your part in the application process is done until it is time to meet with an escrow officer to sign the closing documents. Your CDC will have a few more things to do though, to make sure you are getting the best deal possible. The CDC will order an environmental review and a property appraisal of your project, as required by the SBA. These reviews will be sent along with your application to the SBA for approval. Once you have SBA approval, you can close escrow and take possession of your new property.

Because everyone’s loan is different, it is hard to say how long the entire loan process will take, but it is typically around 60 days, which is comparable with conventional bank loans. The service team at your CDC will be available to answer questions about your 504 loan and address issues with it for the life of your loan.

TMC Financing has over 35 years of experience providing 504 loans to small businesses and is a Premier Certified Lender with the SBA. TMC can make sure you get the best loan package possible in the shortest time. A TMC 504 loan expert can answer all of your questions and discuss your financing options. Contact TMC today to get started.


Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison