SBA 504 Loan Program

U. S. Small Business Administration 504 Program

Typical SBA 504 Project Financial Structure

	Maximum Loan Sample "A"	If Policy Goal is Met Sample "B"
First Trust Deed Bank Loan or Insurance Company Loan	$ 1,875,000	$ 2,500,000
40% Second Trust Deed SBA 504 Loan (Net Debenture)	1,500,000	2,000,000
10% Owner Equity/Required Down Payment	375,000	500,000
100% Project Total/Purchase Price	$3,750,000	$ 5,000,000

For Variables, contact Coastal Business Finance

Cost Structure

A. Financed --

CDC Packaging Fee and Funding Fee -- 1.75% of Net Debenture Underwriting Fee of .5% of Gross Debenture

B. Normally not financed -- ALTA Title Policy

Bank Participation Fee

The Primary Lender must pay .5% of the mortgage senior to the SBA-Guaranteed mortgage.

Owner Equity

A 10% Owner Equity is typically required. New businesses (operating less than two years) and special purpose projects require an additional 5%.

Requirements

The SBA expects that a business create or retain approximately one full-time job for every $50,000 of the SBA 504 portion of the project financing. Jobs should be created within two years after project completion.


-Or-

Larger loans are made when projects meet other Public Policy Goals. Included in this category are businesses that are owned by women, minorities, veterans, those that export at least 10% of sales, or are upgrading their technological capability. Also eligible are projects located in business district revitalization zones.

The Borrower/Business must occupy at least 51% of an existing and 60% of a new building. Borrower can lease-out up to 20% of a new building permanently.

How can these funds be used?

• Purchase of existing Land and Building
• Construction of a new Building(s)
• Purchase of land necessary to construct a new building renovation, restoration and additions
• Purchase of equipment (if part of real property and with long useful life)
• Interim loan costs, closing costs, architectural and engineering fees, title insurance

Contact: Coastal Business Finance
(805) 739-1665 or B.Kearns@sbacdc.org