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504 Program Goals

The SBA 504 program is differentiated from most other sorts of loan program by its unique economic development criteria component.

As a result, Colorado Lending Source is required to demonstrate that a SBA 504 loan will add to the economic vitality of local communities. This is done by reporting, at the time of application, one or more of the following anticipated outcomes:

The creation or retention of jobs within two years of receiving 504 proceeds.

The achievement of one or more Community Development Goals, such as: Improving, diversifying or stabilizing the economy of a locality; Stimulating other business development; bringing new income into the community; Assisting manufacturing firms; and/or, Assisting businesses in a labor surplus area.

The achievement of one or more SBA Public Policy Goals such as: Assisting a firm locating in an enterprise zone district; Assisting an exporter (where exports do or will account for 10% or more of a company's business); Assisting a minority owned (51%+) business; Assisting a women owned (51%+) business; Assisting a veteran owned businesses (51%+); Assisting a rural based business; Assisting a firm increase productivity and competitiveness (via retooling, robotics, modernization, etc.); and/or, Assisting businesses affected by Federal budget reductions.

Credit Criteria for SBA 504 Loans

Certain general credit guidelines are considered by Colorado Lending Source and the SBA on every 504 loan application. Any prudent lender, reviewing any business loan application, might consider a similar set of guidelines.

All the items listed below are crucial in the evaluation of every SBA 504 application received and processed by Colorado Lending Source.

• The character, reputation and credit history of the loan applicant(s);
  

• Experience and depth of management;  

• Strength of the business;  

• Past earnings, projected cash flow and future prospects;  

• Ability to repay the loan with earnings from the business;  

• Sufficient invested equity to operate on a sound financial basis;  

• Potential for long term success;  

• Nature and value of collateral (although, under the 504 Loan Program, lack of collateral cannot be the sole reason for denial of loan request); and,  

• The effect any business affiliates may have on the ultimate repayment ability of the applicant.

No business owner, if he or she can help it, will sell something to someone who won't pay for it. Likewise, no certified development company is interested in making a loan to a business unlikely to be able to make loan payments. That is really the underlying criteria for any SBA 504 loan as the small business owners that participate in the program are truly the only ones who pay for the program. No tax payer dollars or any outside government funds are used to prop-up or artificially subsidize the program.