A business can use proceeds from the 504 Loan Program for direct expenditures to acquire, construct or convert a facility for company expansion, such as:


Where the value of the land is determined at cost, if acquired within the last two years, or at the appraised fair market value, if owned for more than two years.

Site Improvements

Improvements such as grading, paving, landscaping, curb and gutter, etc., although no more than 5% of total project costs can be for community improvements.

Purchase of One or More Existing Buildings

Your business must occupy at least 51% of the total square footage of the four walls of the project building(s).

Conversion, Expansion, or Renovation of One or More Existing Buildings

Note that the cost of improving a tenant space/spaces to be leased out cannot be included in the 504 Loan financing.

Construction of One or More New Buildings

Your business must occupy at least 60% of the project, with projections indicating that your business will need some additional space within 3 years and a reasonable intent that the business will occupy 80% of total space within 10 years. 504 Loan financing can NOT be used to improve tenant space with specialized improvements. A contingency reserve for construction cost overruns, not to exceed 10% of construction costs, may be included in the calculation of total project costs for the purposes of a 504 Loan application.

Acquire and Install Machinery and Equipment

These assets must have a useful life of at least 10 years and be at a fixed location. Furniture, fixtures and equipment with a useful life of less than 10 years can be included in mixed use projects where these are essential to and a minor part of the total project cost.

Professional Fees Directly Attributable and Essential to the Project

Such as title insurance fees, architect fees, engineering fees, any required environmental studies, the cost of a project appraisal, and the cost of any survey required to provide clear title.

Repayment of Interim Financing Costs

Including points charged or interest paid to a lender during the interim or construction phase of the project.

Loan funds may NOT be used for working capital, mortgage broker fees, bridge loans during the construction period, business inventory, rolling stock (i.e. trucks) or refinancing of existing debt of the business.