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 Criteria504 Loan Program
Maximum Loan Amount504 CDC maximum amount ranges from $5 million to $5.5 million, depending on type of business or project.
Percent of GuarantyProject 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 ProceedsLong-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.
MaturityCDC 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 RatesFixed rate on 504 Loan established when the debenture backing loan is sold. Declining prepayment penalty for 1/2 of term.
Guaranty FeesSBA 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 QualifiesAlternative 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 BorrowersLow 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 Frame30 – 45 Days
Broker Origination1 point + $1,495 Processing fee – subject to minimum loan amount.