Why choose a 504 loan?

An SBA 504 loan can finance commercial real estate for owner-occupied properties. These loans require only a 10 percent down payment by the small business owner and funding amounts range from $1 million to $30 million.

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SBA 504 Loan Details

Loan Size
  • $1 million to over $30 million
Eligible Business Size
  • Average net profit after taxes for 2 consecutive years not to exceed $5MM
  • Business net worth not to exceed $15MM
Interest Rate
  • Fixed
  • Fully amortized through term of loan
Terms and Amortization
  • 1st Mortgage: 25 years fully amortized – 5, 7, 10 yr fixed rate
  • 2nd Mortgage: 20 years fully amortized – real estate loan.
Typical Loan Structure
  • 50% bank loan
  • 40% CDC loan
  • 10% borrower down payment (minimum)
Loan Purpose
  • Purchase existing building
  • Refinance existing building
  • Land acquisition and ground up construction (includes soft cost development fees)
  • Expansion of existing building
  • Finance building improvements
Loan Requirements
  • 51% owner occupancy required for existing building
  • 60% owner occupancy required for new construction
Collateral
  • 1st lien position
  • Personal guaranties of the principal owners of 20% or more ownership required
Prepayment Penalty
  • Declining 5-4-3-2-1% (minimum)
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