SBA 504 Loan Parameters
- Proceeds can be used to purchase, build or renovate owner occupied commercial real estate and for machinery and equipment.
- Total loan amount up to $6,000,000 split into 2 parts.
- Bank Conventional First Mortgage Loan: Up to $4,000,000
- SBA 504 Debenture/Second Mortgage Loan: Up to $2,000,000
Time to Close
- Term Sheet within 5 days of completed application!
- Closing within 30 – 60 days from Term Sheet acceptance.
- Up to 90% for office, retail and warehouse space.
- Up to 85% for special use properties like funeral homes, motels and restaurants.
- Conventional First Mortgage Loan – Typically varies from Prime to Prime + 2.75%
- SBA 504 Debenture/Second Mortgage Loan – Fixed rate as set by the SBA for the term of the loan.
- First Mortgage Loan has a term of up to 25 years, fully amortizing.
504 Debenture/Second Mortgage Loan has a term of up to 20 years for
commercial real estate, 10 years for machinery and equipment, fully
- Prepayment penalties will apply.
- Loan must be fully secured by commercial real estate or a combination of commercial real estate and business equipment.
- All principals who own 20% or more of the business are
required to provide a full guarantee. Principals or key managers owning
less than 20% may be required to provide a guarantee on a case-by-case
- The guarantee of affiliated companies may be required
based on the percentage of ownership of the affiliate and the borrower's
relationship with the affiliate.
Debt Service Requirements
- A minimum projected debt service coverage ratio of 1.25 times is required.
- Loans can be made to all for-profit businesses except those
that do not meet SBA eligibility requirements. These are primarily firms
involved in real estate investment/speculation, gambling, adult
entertainment, lending money and pyramid sales schemes. Firms involved
in nuclear waste, utilities, natural resource development, fishing
vessels, biotechnology and internet technology are also excluded from
- Appraisal and Environmental reports will be required for real estate used as collateral.
- Borrowers cannot have filed for bankruptcy within the last three years.
- Payment reserves are generally required
- Life insurance equal to 50% of the Conventional First Mortgage Loan will generally be required.
Click here to inquire about SBA 504 Loans
We Can’t Fund Transactions We Don’t Know About
Your Next Step… Call Us!
Referrals are the cornerstone of our business success. They are both welcome and most appreciated.