Benefits to the Borrower
- Up to 90% financing on fixed assets.
- Below market, long-term, fixed rate funds.
- Twenty-year loan avoids balloon payments and renegotiation of the loan with possible higher payments.
- Lower down payment conserves working capital.
|
Benefits to the Bank
- First mortgage position with low loan-to-value reduces collateral risk.
- SBCC staff prepares all SBA forms, completes the packaging and documentation, closes and services the loan.
- Builds a stronger banking relationship by providing the customer the benefits of a 504 loan, while maintaining the banking relationship.
- The bank’s loan at 50% of project cost allows banks with in-house lending limits to preserve available funds for the borrower’s future working capital/growth needs.
- Helps with CRA credit requirements.
|
|
How It Works
A typical 504 loan involves a loan secured by a first mortgage from a commercial bank or other lending source covering 50% of the project. SBCC provides up to 40% of the funds with a second mortgage. The borrower must provide at least 10% of the financing for the 504 project.
MAXIMUM SBA PORTION 504 LOAN AMOUNTS
- $1.5 M for most loans
- $2.0 M for public policy loans– veteran, minority, woman-owned, rural development, revitalization districts
- $4.0 M for eligible manufacturing companies and renewable energy source projects
|
