Vermont 504 Loan Program

The Vermont 504 Corporation, with SBA’s approval, makes SBA 504 loans to eligible and qualified borrowers. To fund these loans, the SBA issues and guarantees debentures or bonds which are sold to private investors. The proceeds of the debenture are subsequently loaned to the borrower. SBA 504 loans are made in conjunction with a “third party lender” (i.e. a bank) that normally provides financing for 50% of the project. Vermont 504 Corporation’s SBA 504 loan lends up to 40% of the Project amount in a lien position that is junior to the third party lender, leaving as little as a 10% equity requirement from the Borrower. 

Eligible Borrowers

  • Organized as a for-profit business;
  • Business net worth cannot exceed $15 million;
  • Average net profit after taxes cannot exceed $5.0 million for previous two years;
  • Located, or planning to locate, in the United States; 
  • Owner-user of the project being financed (51% occupancy minimum if existing building; 60% occupancy if new construction).

Eligible Uses of Proceeds

  • Real estate acquisition, construction, rehabilitation or expansion;
  • Purchase and installation of machinery and equipment;
  • Associated soft costs;
  • Proceeds may not be used for working capital or inventory; 
  • In certain cases, refinancing of existing debt may be eligible.

Loan Rates and Terms

  • Rates on SBA 504 loans are set monthly and are based on the current market rate of ten and twenty year U.S. Treasury bonds (plus an increment). The rate is fixed at closing for the life of the loan (10 year, 20 year, or 25 year)Click here for current rates and fees;
  • The SBA 504 loan is funded after a project is completed and interim (bridge) financing must be arranged.

Loan Amounts

  • The maximum non-manufacturing SBA 504 loan is $5 million. Certain small manufacturers are eligible for up to $5.5 million in SBA 504 financing.

Fee Structure

  • The upfront processing and closing fees required by the SBA are rolled into the SBA 504 loan, thereby minimizing out-of-pocket expenses;
  • Prepayment penalties, which are reduced yearly and eliminated halfway through the loan term, apply to all SBA 504 loans.

Application Process

  • Applications are available from the VEDA office in Montpelier or can be downloaded by clicking here;
  • Once received, applications will be evaluated promptly by Vermont 504 Corporation staff.  The Vermont 504 Loan Committee meets weekly to review loan requests; 
  • SBA approval is generally obtained in 7-10 business days.