504 Business Loans

504 Loan Eligibility

For a SBA 504 loan through SomerCor, a business must satisfy the following eligibility requirements.

Business Requirements

  • The project must be located within the state of Illinois.
  • If the project involves the purchase of an existing building, the business must occupy at least 51% of the space; 60%-80% for new constuction.
  • The business concern must be for-profit.
  • The business must have a tangible net worth of less than $15 million and less than $5 million in annual after tax profits (average over the last 2 years).
  • The business owner must be a U.S. Citizen or resident alien.
  • If equipment is to be purchased, the expected useful life must be at least ten (10) years.

Loan Use

  • Land

    The project may include land, regardless of how long it has been owned. Previously owned land may be counted towards equity at the purchase price, if purchased within 2 years. Any land purchased prior to this 2-year period must be appraised and the appraised value can then be counted toward your equity.

  • Land improvements

    Improvements such as grading, paving landscaping, curb and gutter work can also be included, up to 5% of the total project.

  • Purchase of existing building and building improvements

    The cost of purchasing and improving an existing building are eligible, as long as the purchase price meets an acceptable appraisal, and the business occupies at least 51% of the total space. The improvements can include heating, electrical, plumbing, facade expenditures and roofing costs.

  • New building construction

    Construction costs are eligible, as long as the business occupies at least 60%-80% of the space upon the project’s completion. A contingency reserve for cost overruns of up to 10% of construction cost can be included in the calculation of the total project. Buildout of space not occupied by the business is not eligible.

  • Furniture and fixtures

    The cost of furniture can be included as long as they are less than 10% of the total project.

  • Machinery and equipment

    All costs related to the purchase, dismantling, transportation, or installation of machinery and equipment can be included, as long as the assets have useful life of at least 10 years.

  • Soft costs

    All professional fees directly attributed to the project are eligible. These include: appraisals, environmental studies, title insurance fees, architect fees, engineering fees, electricity, gas and water hook-up charges, and related accounting fees. Additional expenses may apply.

  • Interim financing costs

    Interest and points on the interim construction loan can be included in the project cost. Any expenses incurred towards the total cost of a project, other than a land purchase, must be made within nine months prior to the date a completed loan application package is received for consideration.

  • Refinance of existing debt

    Up to 50% of total project costs can be used to refinance existing fixed asset debt.

Contact Us

Chicago Main Office
601 South LaSalle, Suite 510, Chicago, IL 60605 map
P: (312) 360 3300   F: (312) 757 4370   Email

Springfield Office
3201 W White Oaks Dr, Springfield, IL 62704
P: (217) 793 1075   Email

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