SBA 504 Loans
SBA provides loans to businesses; so the requirements of eligibility are based on specific aspects of the business and its principals. The CDC/504 Loan Program provides financing for major fixed assets such as equipment or real estate. To be considered for a Certified Development Company/504 loan, applicants must meet certain eligibility requirements. All programs and rates are subject to change at any time.
|Lending Criteria||504 Loan Program|
|Maximum Loan Amount||504 CDC maximum amount ranges from $5 million to $5.5 million, depending on type of business or project.|
|Percent of Guaranty||Project costs financed as follows: CDC: up to 40% Lender: 50% (Nonguaranteed) Equity: 10% plus additional 5% if new business and/ or 5% if special use property.|
|Use of Proceeds||Long-term, fixed-asset loans; Lender (nonguaranteed) financing secured by first lien on project assets. CDC loan provided from SBA 100% guaranteed debenture sold to investors at fixed rate secured by 2nd lien.|
|Maturity||CDC Loan: 10- or 20-year term fixed interest rate. Lender Loan: Unguaranteed financing may have a shorter term. May be fixed or adjustable interest rate|
|Maximum Interest Rates||Fixed rate on 504 Loan established when the debenture backing loan is sold. Declining prepayment penalty for 1/2 of term.|
|Guaranty Fees||SBA guaranty fee on debenture is 0.0%. A participation fee of 0.5% is on lender share, plus CDC may charge up to 1.5% on their share. CDC charges a monthly servicing fee of 0.625%-2.0% on unpaid balance. Ongoing guaranty fee is 0.914% of principal outstanding. Ongoing fee % does not change during term.|
|Who Qualifies||Alternative Size Standard: For-profit businesses that do not exceed $15 million in tangible net worth, and do not have an average two full fiscal year net income over $5 million. Owner Occupied 51% for existing or 60% for new construction.|
|Benefits to Borrowers||Low down payment – equity (10,15 or 20 percent) (The equity contribution may be borrowed as long as it is not from an SBA loan) Fees can be financed; SBA /CDC Portion: Long-term fixed rate Full amortization and No balloons|
|Closing Time Frame||30 – 45 Days|
|Broker Origination||1 point + $1,495 Processing fee – subject to minimum loan amount.|
This information is NOT a loan approval or commitment to lend. The actual loan amount, interest rate, fees, costs and monthly payment on your specific loan transaction can vary and will depend on your choice of loan product and your unique credit profile. Loans (in CA) will be made pursuant to BRE License #02001852. Loan Brook, Inc. is an equal opportunity lender.