| |
SBA
504 LOAN
(Commercial
Real Estate & Equipment)
90% Fixed-Rate
| SBA
7(a) LOAN
(General
Purpose) |
Loan
Size |
$125,000
to over $10,000,000 |
$50,000
to $2,000,000 |
Interest
Rate |
- Fixed
- Fully
amortized through the term of the loan
- Interest
rates on 504 loans are set monthly at the time of funding
at an increment above the current market rate for five-year
and ten-year U.S. treasury issues
|
- Variable
rate adjusted quarterly
- Fully
amortized through the term of the loan
- Interest
rates are negotiated between the borrower and the lender
subject to SBA maximums of:
Prime plus 3.25% if the loan maturity is less than 7 years
OR
Prime plus 3.75% if the loan maturity is 7 years or more
|
Eligible
Business Size |
- Business
net worth not to exceed $8.5 million
- Average
net profit after taxes for 2 consecutive years not to exceed
$2.5 million
OR
- Meet
7(a) requirements
|
- Determined
by industry type
- Annual
sales not to exceed a range from $750,000 to $25 million
for retail, service and agriculture
- Number
of employees not to exceed a range from 100 to 1,000 for
wholesale and manufacturing
|
Terms
Available and Amortization Periods |
- 20
years fully amortized – real estate loan
- 10
years fully amortized – equipment loan
- No
balloon payments
|
- 25
years – real estate
- 10
years – equipment, business acquisition
- 5 to
7 years – working capital
- All
loans are fully amortized
- No
balloon payments
|
Loan
Structure |
- 50%
bank loan
- 40%
CDC loan
- 10%
borrower down payment
|
- 90%
bank loan LOAN STRUCTURE
- 10%
borrower down payment
|
Loan
Purchase |
- Purchase
existing building
- Land
acquisition and ground up construction (includes soft cost
development fees)
- Expansion
of existing building
- Finance
building improvements
- Purchase
equipment
|
- Expand,
acquire or start a business
- Purchase
or construct real estate
- Refinance
existing business debt
- Buy
equipment
- Provide
working capital
- Construct
leasehold improvements
- Purchase
inventory
|
Loan
Program Requirements |
- 51%
owner occupancy required for existing building
- 60%
owner occupancy required for new construction
- Equipment
with a minimum 10 year economic life
|
- 51%
owner occupancy required for existing building
- 60%
owner occupancy required for new construction
- All
assets financed must be used to the direct benefit of the
business
|
Collateral |
- Generally,
the project assets being financed are used as collateral
- Personal
guaranties of the principal owners of 20% or more ownership
are required
|
- Collateral
is the subject assets acquired by loan proceeds
- May
require pledge of personal residence if equity available
- Personal
guaranties of the principal owners of 20% or more ownership
are required
|
Loan
Fees |
- Fees
are financed in the 504 loan
- Fees
are negotiated for the 50% bank loan accompanying the 504
loan
- Approximate
2.125% fee for the 504 CDC loan plus a fee for legal review
- Weighted
average fees for both loans are 1.5%
|
- Fees
can be financed in the 7(a) loan
- Loans
$150,000 and less = 2%
- Loans
$150,000 to $700,000 = 3%
- Loans
$700,000 to $2,000,000 = 3.5%
- Loans
greater than $1,000,000 are charged an additional 0.25%
for that portion above $1,000,000
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