Call Us


504 Loans How to Qualify

How to Qualify for an SBA 504 Loan

Over 98% of incorporated business entities are eligible for 504 loans. If you would like to know if your business is eligible for a 504 loan, examine the list below:

Eligible Borrowers

  • Any business that is for profit and not publicly traded
  • Businesses with a tangible net worth, including affiliates, that does not exceed $15 million
  • The net income of the business must not exceed more than $5 million for the previous 2 years
  • The personal liquidity of each principal must need exceed the project costs of the loan
  • 51% of the ownership must be comprise of legal US citizens or legal permanent residents

Ineligible Borrowers

  • Non-profits, unless they are classified as sheltered workshops
  • Anyone who is a passive holder of personal property and/or real estate
  • Lending institutions, with the exception of mortgage brokers and correspondent lenders
  • Life insurance companies, but franchised agents do have eligibility
  • Any business located in either a foreign country or owned by aliens
  • Any business that sells its products primarily through a pyramid plan
  • Businesses which rely on gambling as a form of income in any way
  • Businesses that make an income illegally
  • Any company that restricts patronage in any way
  • Government owned entities are not eligible, with the exception of Native American Tribes
  • Any business whose primary goal is to promote a religion
  • Consumer and marketing cooperatives are ineligible, but producer cooperatives are
  • Any company engaged in loan packaging practices
  • Businesses owned by individuals renowned to have poor personal character
  • Ineligible Borrowers (continued)
  • Companies who focus excessively on providing sexual material to a market
  • Any company who has previously defaulted
  • on at least 1 Federal loan
  • Businesses who primarily engage in politics or lobbying
  • Companies who are speculative or high-risk in nature

You May Not Use the Funds You Borrow for the Following Purposes:

  • Working capital
  • Rolling stock
  • Inventory
  • Business good will

If your business does not meet any of the above criteria, then more than likely you are eligible to receive 504 financing.
But, to get that financing, you have to go through the application process first. Fortunately, at NEDCO, we make the complex process as simple and straightforward as it can be.

Contact us to begin the process of receiving 504 financing today!