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What is the SBA 504 Green Loan?

The SBA 504 Green Loan program offers loans for commercial real estate to small firms who want to expand. The SBA provides up to $5.5 million in funding for each project through the SBA 504 Green Loan. Multiple SBA 504 Green Loans, each with a limit of $5.5 million and a potential total of $16.5 million in SBA financing, are available to small firms. Although individual projects might cost more than $16.5 million, bear in mind that SBA Green financing has a total maximum.

Key Advantages of the SBA Green Loan Program:

  • It permits bigger SBA loans and numerous SBA loans to the same applicant or applicants).
  • This second mortgage, also known as a “Green 504 loan” or SBA Green Loan, has a maximum amount of $5.5 million, allowing for transactions ranging from $12 to $20 million. Additionally, loans are offered on a “per project” basis. In other words, larger enterprises can use numerous 504 loans on many buildings, while the “regular” SBA maximum eligibility constraints of $5 million per borrower do not apply.
  • Because the standard SBA 504 conditions for job creation and retention do not apply, bigger loans are conceivable for companies with fewer employees. This might be quite helpful for eligible self-storage companies, lodging facilities, parking garages, and other establishments with large floor plans but low staffing levels.
  • It also offers financing for small and medium-sized enterprises to purchase, construct, or refinance energy-efficient buildings. More significant firms are better suited for the more considerable loan amounts, and qualifying for these loans is simpler for them of the newly increased maximum tangible net worth and income limits of $15 million and $5 million, respectively.

Qualifying for the Loan

The “Green 504” is often only available to those who generate above 15% of their own energy. The most apparent approach is to install solar panels on your roof, land, carport, or parking area.


An alternative approach would be to purchase or create a building that consumes 10% less energy than your company uses to replace existing structures. It’s crucial to remember that the 10% decrease in energy use does not translate into money saved on lower electricity bills.

When you own or rent:

  • If you already lease or own a building and finance another building with a source of energy production that can provide 10% of the building’s energy needs, you may be eligible.
  • If you currently lease a facility, decide to buy it, and make changes that result in a 10% reduction in your energy usage, you may be eligible. A straightforward solution may involve retrofitting the lighting with LED lights, as lighting usually consumes 20-30% of the energy used in buildings.
  • If you construct a new facility that is 10% more energy efficient and you currently own or rent a building, you may also be eligible. Once more, lighting is a fantastic method to do this. Still, there are many other ways, such as improved HVAC, energy-efficient windows, modular construction with structurally insulated panels, improved insulation, etc.


Remember: Efficiency is the aim. The 10% decrease is determined by measuring energy use rather than energy bills.

If you are eligible but do not already own or rent a building:

Purchasing or constructing a new facility that generates enough renewable energy to reduce the structure’s energy usage relative to what it would have been without the enhancements is another way to be eligible for the SBA Green Loan Program.


The SBA mandates that you generate enough energy from your sources to cover 10% of your overall consumption if you do not presently own a building and have no baseline for energy consumption. This is because you need an existing building to compare your energy use.


Any popular renewable energy sources—solar, wind, geothermal, etc.—can be used to generate energy in various ways, and the loan amount may cover the installation expenses.

Production of Renewable Energy for Consumers

If your company generates renewable fuels or energy for other people or to be sold to the nearby utility, you may also be eligible. Since many lenders are still in the recovery phase and would instead lend to more established enterprises, this is easier for already-existing businesses and more challenging for startups.


It’s becoming more common for lenders in some areas of the nation to finance solar farms, and it’s not impossible for a company that produces green goods to get a loan granted. A growing “waste to energy” company needing a larger facility would be a prime example.

Ramp Up Your Eligibility by Going Green

One of the main advantages of the Green 504 loan is that it eliminates the usual $5 million maximum SBA eligibility restriction per borrower, which usually prevents profitable companies from obtaining more government-guaranteed financing.


The Green 504 opens up opportunities for many firms needing finance, but some lenders still hesitate to lend to certain enterprises without a government guarantee.


As a result, a company can now use the new $5.5 million maximum amount of SBA funding for each project to buy, construct, or refinance numerous facilities. Remember that there is no upper limit on the size of the first mortgage, so projects with budgets between $10 and $20 million can be funded. The second mortgage, which the SBA guarantees, must be at most $5.5 million, or 30 to 40% of the overall financing.