SBA 504 Loan The SBA 504 Loan Program allows the small business owner to purchase a commercial property as owner/user building with minimum of 10% down payment or equity injection. Like any SBA programs, SBA 504 loan has variety of rules and regulations and City Capital Finance has the expertise to guide our clients through the process and help business owners purchase the real estate property or use the real estate your company already owns as a resource for financing. SBA 504 loans generally finance real estate for a much longer period than conventional real estate loans. Rates are also favorable and loan to value ratios are typically higher (up to 90% of appraised value of the property or project costs) than traditional conventional loans. The typical structure of SBA 504 loan involves 3 parties. First a bank or lender originates the loan and approves it first, and is responsible for the first trust deed position of 50% of total loan amount. Then the local Community Development Corporation (CDC) participates for the second profit organizations designed to create jobs for community and assist in certain kinds of loans to small businesses. Small Business Administration (SBA) is the final party that guarantees 100% of the loan to both lenders. SBA does not lend money. Purpose of Loan Purchase and construction of commercial real estate Acquisition of new machinery and equipment Size of Loan $500,000 to $4 million Cash Injection Requirements As little as 10%, depending on use of proceeds Terms of Loan Up to 20 years for real estate 10 years for machinery and equipment Loan Fees Loan fee generally 1.5% of loan amount Construction loan fees based on project size Qualifying Requirements 3 years management experience or 1 year profitable business ownership experience Adequate historical cash flow to repay the loan Owner/user to occupy 51% of existing building or 67% of new construction Net worth of less than $8.5 million and net profit of less than $3 million average over the last two years Acceptable credit history Loan Turnaround times 10 business days for Bank approval upon receipt of complete package 45-60 days funding from receipt of completed application package and CDC approval