Unlocking the potential of the SBA 504 Green Program can be a game-changer for your business. This program allows you to access an aggregate of $16.5 million in total SBA loan proceeds—far beyond the typical $5 million cap. So, what’s the magic behind this program?
Understanding the SBA 504 Green Program
The SBA 504 Green Program is a unique approach to financing. It operates similarly to the traditional SBA 504 program, which involves a senior loan and a junior loan (the SBA piece). With this program, you can finance up to 90% of total project costs. For instance, in a $10 million project, you could structure it like this:
- $5 million as senior debt
- $4 million as junior debt
- $1 million as equity injection
Qualifying for the Program
To qualify for the SBA 504 Green Program, you need to make energy-efficient upgrades to your property that reduce energy consumption by at least 10%. This could include:
- Installing LED lighting
- Adding solar panels
Third-party engineering companies can help identify cost-effective solutions to achieve this energy reduction. They typically provide an engineering report that outlines the necessary upgrades.
Expanding Your Business
With the SBA 504 Green Program, you can undertake projects worth over $20 million by leveraging the potential $16.5 million aggregate limit. This means you can buy additional buildings or expand into new locations without being constrained by the usual $5 million limit.
This program is especially beneficial for businesses looking to expand, such as self-storage facilities or companies with multiple locations. The financing is structured to provide the best leverage, allowing you to grow without the fear of fluctuating rates, as the junior loan is fixed for 25 years.
Finding the Right Lender
Choosing the right lender is crucial. My team specializes in facilitating connections with banks, credit unions, or non-bank SBA lenders that are eager to support your project. This is where we come in—to ensure you find the right fit for your financing needs.
If you’re interested in discussing your options, feel free to book a discovery call with me. I can guide you through the SBA loan process, whether you’re exploring a 7(a) or 504 loan.
Final Thoughts
In summary, the SBA 504 Green Program is an exceptional financing option for businesses looking to expand while achieving energy efficiency. With the right strategy, you can maximize your loan proceeds and take your business to new heights. If you have any questions or need additional information, don’t hesitate to ask me anything. I’m here to help!
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