Why Use SBA 504 Loans?

SBA 504 Loans are long term, government backed guaranteed lending for commercial real estate projects. A 504 Loan, unlike commercial loans, can get you up to 90% financing of your total project cost. This is the first and most important benefit-- by using an SBA 504 loan you can free up valuable capital for operational uses in your business. 504 Loans offer long term fixed rates below the market level. 

Eligible Use of Funds

  • Land
  • Acquisition of Existing Building
  • New Construction
  • Building Expansion/Renovation
  • Long-Term Equipment
  • Professional Fees
  • Lender's Interim Points & Interest
  • Debt Refinance on Expansion Project

Interest Rate and Terms

  • Fixed Rate-- based on treasury rates
  • Fully-Amortized over life of loan
  • Up to a 20-year term for real estate
  • Up to a 10-year term for equipment
  • Rate is made permanent when the SBA funds the debenture

Borrower's Injection

  • 10% for majority of loans
  • 15% for Start-Ups
  • 20% for Start-Up + Special-Purpose Property

     

      SBA 504 Benefits For Borrowers

      • Receive 40% of your project cost at a fixed rate over 10-20-year term
      • Significantly lower injection of equity
      • Increased available capital
      • Decreased risk for your 1st Lien Lender
      • Most soft costs are eligible to be rolled into your financing
      • Debt refinancing in expansion projects
      • Allows financing of much larger projects than a SBA 7(a) loan

        SBA 504 Benefits For Lenders

        • 1st Lien position for banks, 2nd Lien position for SBAs
        • Low Loan-to-Value strengthens your loan portfolio
        • Receive CRA Credit
        • Additional income opportunities in secondary market
        • Minimal equity injection requirements help lenders compete for more business
        • Offers financing that differentiates your portfolio from the marketplace