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SBA 504 LOANS

COMMERCIAL REAL ESTATE  |  EQUIPMENT  |  REFINANCE

 

25-YR FIXED RATE

6.35%

20-YR FIXED RATE

6.44%

10-YR FIXED RATE

6.89%

REFINANCE RATE

+0.025%

empowering economic growth

504 loan program

expansion solutions

Purchase a Building

Construct a New Facility

Renovate Your Current Property

Purchase Heavy Machinery or Equipment

Refinance Commercial Mortgage Debt

Recent Blog Posts…

How SBA 504 Loans Work

50%

LOCAL BANK

A bank provides a first mortgage for 
50% of the total project costs

40%

SBA 504 LOAN

 Growth Corp provides an SBA 504 Loan
for 40% of the total project costs

10%

BORROWER EQUITY

 The borrower provides a down payment of
typically just 10% of the total project costs

Higher equity requirements exist for start-ups or special purpose properties…the equity required will increase by 5% if one condition exists or by 10% if both.

SBA 504 Loans are made in conjunction with your local bank...so you can keep your lending relationship.

 

504 Case Study – New Construction

A widget manufacturer that has been leasing space wants to construct a building to facilitate business expansion.

Purchase Land $500,000
Construct Building $1,500,000
Purchase Furniture & Fixtures $250,000
Soft Costs* $150,000
Total $2,400,000

*Soft costs can include interim interest and fees, professional fees, a construction contingency, appraisal and environmental costs, etc.

If a bank was willing to finance the project conventionally, it would typically lend up to 80% of the project costs at a floating interest rate with a 15 year amortization and a balloon after three to five years.  However, utilizing the 504 Loan Program, up to 90% of the project costs can be financed.  The bank lends up to 50%, thereby reducing its risk and corresponding interest rate.  Growth Corp lends up to 40% at a fixed rate for 20 years, with a down payment of only 10% from the borrower.

  Conventional With 504
Bank $1,920,000 $1,200,000
Growth Corp $0 $960,000
Borrower $480,000 $240,000
Total $2,400,000 $2,400,000

As shown, the borrower’s equity injection can be reduced by $240,000, thereby conserving cash and providing the necessary working capital to support continued growth.  Additionally, cash flow is improved as a result of the longer maturity and potentially lower interest rates.

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SBA 504 LOANS

How Will You Grow Your Business?

877-BEST 504

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