SBA-504 LOANS


NOTE: SBA-504 LOANS CAN NOW BE USED FOR DEBT REFINANCE!

Click here for a guide card on the SBA-504 Debt Refinance Program



ELIGIBILITY

  

  • Must be a for-profit business. Non-profit groups such as churches are not eligible.

  • Must achieve an eligibility goal of SBA (usually easy to do).

  • Must be classified as small (net worth under $15 million & net profits under $8.5 million).

  • Owner must occupy 51% of an existing building or 80% of the newly constructed space.

  • Investment properties such as apartments and strip shopping centers are not eligible.

  • Speculative ventures (such as subdivision development) are not eligible.

  • Debt refinance allowed in some instances.

 
ALLOWABLE USES OF PROCEEDS 

 

  • Acquisition of vacant land for construction.

  • Acquisition of existing land and building.

  • Building construction and/or renovation.

  • Machinery, equipment, furniture, fixtures located in building being financed.

  • Associated soft costs such as architectural fees, engineering, surveys, appraisals, etc.

     

TYPICAL PROJECT

 


Project Costs

 

Project Sources

 

Land Purchase

$    200,000

 

Bank (borrower selected)

$     500,000

Building Construction

$    700,000

 

SBA/CSRA 504 Loan

$   400,000*

Machinery

$      75,000

 

Borrower Equity (Down Payment)

$     100,000

Soft Costs…

$      25,000

 

 

TOTAL PROJECT

$ 1,000,000

 

TOTAL SOURCES

$  1,000,000


Note: (Loan can be up to $5,500,000 if the loan is to a manfacturer.)


*Maximum amount of 504 2nd mortgage loan can be $5,000,000

 

RATES, TERMS, AND FEES

 

  • Bank sets rate on their first mortgage loan. If SBA term is 20 years, bank must be 10. 

  • Bank must pay a one-time fee of ½ of 1% fee to SBA for participating in the program.

  • All SBA 504 bond costs are financed into the loan.

  • SBA 504 loans are assumable.

 

COLLATERAL

 

  • Typically project collateral stands for the loan on SBA-504 loans.

     

Click here for a guide card on the SBA-504 program. 

 

Click here for the SBA-504 application checklist.