SBA 504 Loan Structure

SBA 504 Loan Structure

 

What are the advantages?

 

  • Interest rates on 504 loans are generally below those offered by conventional banks.
  • Maturities of 10 and 20 years are available.
  • Low down-payment requirements help preserves working capital.
  • Loans are assumable by qualified, acquiring businesses.
  • Fees and other up-front costs and expenses may be financed with the loan.
  • The assets being financed are typically used as collateral. Personal guaranties of the principal owners are also required.
  • Loans are offered by the SBA, the nation's largest single financial backer of small businesses.
  • The program offers additional benefits for women-, veteran- and minority-owned companies as well as businesses in rural communities.
  • The underwriting process for both the Bank and the SBA is concurrent in order to ensure a fast and seamless process.  

How are loans structured?

 

Bank will provide 50 percent of the project financing and receive a first mortgage on 100 percent of the assets.

 

Through the 504 program, the SBA finances up to 40 percent of the project with the borrower providing as little as 10 percent. Extended loan terms are available, using an amortization of 20 years for real estate and 10 years for equipment.

Personal guaranties of the principal owners are also required.

 

The 504 loan will have a 10- or 20- year term depending on the useful life of the assets financed.

 

 

 

What businesses are eligible?

 

  • For-profit businesses
  • Projects that create or retain jobs
  • Net worth below $7 million
  • Two-year average after tax annual profits below $2.5 million
  • Credit-worthy small businesses
  • Bank financing unavailable on same terms


Are there other requirements?

 

An applicant purchasing existing commercial real estate must occupy a minimum 51% of the building space 

 

For more information or to see if you may qualify for an SBA 504 Loan…

 

Please call us directly at 1-888-613-7159