SBA 504 Loan Helps Family-Owned Small Business Buy Property, Embrace Growth and New Job Creation
SBA 504 Green Loan: Everything You Need To Know (2024)
In a significant new development, the Biden-Harris Administration has announced the removal of the $16.5M aggregate cap on the SBA 504 Loan Program for clean energy projects. This change, declared by SBA Administrator Isabel Casillas Guzman, aims to provide small businesses with the capital needed to innovate and adopt sustainable practices, aligning with President Biden’s goal of net-zero emissions by 2050.
With the elimination of the lending cap, small enterprises are now able to secure multiple 504 loans of up to $5.5 million each with no aggregate limit. This is part of broader efforts to democratize investment in clean energy, positioning small businesses as key players in this transition.
Key Benefits
- Larger SBA/CDC Loan Amount – SBA maximum per project contribution increases to a $5.5 million cap with no maximum total project limit.
- Higher Option for Aggregated Lending – Borrowers can have multiple SBA 504 Green Project loans with no aggregate cap limit on the number of loans or capital (up to the maximum SBA/CDC contribution of $5.5 million per project).
- Save Money – Reduction in energy costs will have long-term financial benefits for the business, while most energy improvements/equipment can be financed within the loan.
Eligibility
Borrowers need to meet one goal to qualify.
- Reduce energy use by at least 10%: Improvements to a building currently occupied by the borrower must show a minimum of 10% reduction to energy usage (compared to historical consumption) through upgrades in equipment such as improved lighting, insulation, HVAC and other energy consuming equipment. Borrowers purchasing or constructing a replacement property must be relocating to a similar region (as determined by SBA) with potential for similar historical energy consumption.
- Generate at least 15% renewable energy: The property must have upgrades performed that produce at least 15% renewable energy. Energy that can be produced includes solar, wind, geothermal, hydropower, and biomass.
- LEED Certification*: If historical energy consumption records for the property are not available, a project can qualify if it is built or retrofitted using LEED certification standards through the completion of upgrades.
“We were reportedly the first company in the nation to get a SBA 504 Green loan, which allowed us to buy our building, save energy and save money. By adding energy-efficient lighting, HVAC and other retrofits, we’ve saved about $11,000 a year which has helped us to further grow the company.”
– Carlos Herrera, Owner of Interior Removal Specialist, Los Angeles
The SBA’s focus on clean energy funding highlights its commitment to advancing a clean energy economy. By increasing financial support, the SBA empowers small businesses to implement energy-saving measures and renewable energy projects, fostering innovation and promoting economic growth and sustainability.
*Maximum SBA/CDC contribution $5.5 million per project
