How long do you have to be in business to qualify?

There is no requirement regarding length of time in business; however, start-up businesses are subject to additional injection (down payment).

Can the building be owned by an entity other than the operating company?

Yes, a real estate holding company can own the building. However, in this scenario, the operating company, the real estate holding entity, and all individuals with 20% or more interest must guarantee the loan.

If the operating company is leasing the building from a real estate holding entity, what documentation is needed?

Leases If the Borrower is different from the Operating Company, there must be a lease between the Borrower and the Operating Company for 100% of the property being financed with a 504 loan. If there are third-party tenant(s), the sublease(s) must be between the operating company and the third party tenant(s). Subordination Agreements Every lease and sublease on the property must be made subordinate (or junior) to the 504 Deed of Trust. The Borrower and the Operating Company must sign the Subordination Agreement related to their lease. The Operating Company and any subtenants must sign the Subordination Agreement related to their lease.

How much can I borrow?

TYPICAL 504 LOAN SIZE VARIES FROM $100,000 TO $5.5 MILLION DEPENDING ON ELIGIBILITY, JOB CREATION, COMMUNITY DEVELOPMENT AND ECONOMIC DEVELOPMENT GOALS MET BY THE PROJECT. ​

How much space must the operating company use?

The operating company must occupy a minimum of 51% of an existing building and 60% of a newly constructed building.

What fees are involved?

​· SBA Fee: 2.4% of SBA portion of loan.
· Bank Fees: Negotiated with bank, but typically 1% or 2% on bank loan.
· ALL SBA fees and most bank fees are financed.

What are the collateral requirements? Will I have to pledge my home?

The subject property to be financed will be the collateral. CDCs do not usually take personal residences as collateral. However, on a case-by-case basis, CDCs may exercise the option to take additional collateral.

Is there a lot of paper work?

The paper work is comparable to that of any business loan. We have made efforts to streamline the process wherever possible.

Is my loan assumable?

Yes, SBA 504 loans are fully assumable.

Can the down payment be borrowed?

Preferably the borrower will put at least 10% of their own funds into the project. The down payment can be borrowed, but owners must show that there is sufficient income to service the debt.