Real Estate Loan Program 504
SBA 504 loans are designed specifically for financing owner-occupied commercial real estate or other long-term fixed assets with a lower down payment. Financing is provided in partnership with a Certified Development Company (CDC). SBA 504 loans are generally structured with 50% financing by Lender/Bank who assumes the first lien position, 40% financing by the CDC who assumes the second lien position and10% down from the borrower. The Borrowers must occupy at least 51% of existing structures purchased with loan proceeds.
- Existing, for-profit businesses
- Net worth $6MM or less, net profits after taxes $2MM or less
- 1 job created for every $50,000 in SBA loan funds
- From $150,000 to $3,000,000 ($2,000,000 for special purpose real estate)
- Maximum SBA loan $1,500,000 (Up to $4,000,000 for small manufacturers)
- Buildings (new purchase)
- Machinery & Equipment (minimum useful life of 10 years)
- Bank’s portion– rate negotiated between borrower and Bank (fixed or variable)
- SBA/CDC portion below market fixed interest payment , loan rate set when debenture is sold
- Lender's loan – minimum 10 years on Real Estate;
- 7 years on Machinery & Equipment
- SBA/CDC loan – 20 years
- Normal fees and closing costs apply to the bank loan plus a .5% participation fee. Typically the SBA has various fees of approximately 2.25% of the SBA loan amount.
- *Fees may be included in the total financing amount