Do you have a borrower considering a major equipment CAPEX project—perhaps automation to address labor shortages or upgrades to support growth? The SBA 504 loan program is a powerful tool to help your clients finance these investments while strengthening your financial institution’s competitive position.
Why Consider 504 for Equipment Financing?
- Most fixed equipment qualifies—ideal for manufacturing, food processing, printing, fabrication, and more. (Rolling stock not eligible.)
- Up to 90% financing with only 10% down for most borrowers.
- Some Installation and engineering costs can be financed within the 504 project.
- 10-, 20-, or 25-year fixed-rate options based on equipment useful life.
- Competes effectively with vendor financing.
- Bank / Credit Union’s amortization does not need to match the 504 term.
- No appraisal required for new equipment or used equipment purchased from reputable dealers.
Real-World Example:
Borrower Type: Manufacturer adding a new production line
Project Size: $2.72 million
Includes: Equipment purchase + installation costs
Uses of Funds:
- Equipment Purchase: $2,441,700
- Installation Costs: $270,369
- Soft Costs: $7,931
- Total: $2,720,000
Sources of Funds:
- Third Party Lender: $1,360,000 (50%)
- WBD/SBA 504: $1,088,000 (40%)
- Borrower Contribution: $272,000 (10%)
- Total: $2,720,000
504 Structure:
- Third Party Lender: 10-year fully amortizing term at 50% LTV
- 504: 20-year fixed rate supported by manufacturer’s useful-life letter
- Borrower Down Payment: 10%
- Installation costs financed within 504 structure
Takeaway for Lenders:
If you’re working with a borrower evaluating a $500,000+ equipment investment, the SBA 504 program can help you strengthen your lending relationship, offer long-term fixed-rate financing, and preserve borrower liquidity.
Connect with your local WBD Loan Officer to learn more.
Download our 504 Equipment Financing Sell Sheet.
