SBA 504 Real Estate Finance Program
BFG offers SBA 504 Loan programs with finacing availibleto 90% of the
acquisition of a commercial property. Conventional commercial real estate
loans are typically maximum LTV’s of 60% to 70%. This unique program
is specifiacally designed to limit the equity investment a business owner
has to make when that business has decided to acquire property.
Typically, a 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped.
| Property Types: |
Retail, Offices, Warehouses, Office Condominiums, Gas
Stations, Commercial - Mixed use properties, Restaurants, Taverns,
Hotels, Motels, Special Purpose/Unique Properties, Most commercial
properties considered. |
| Loan Sizing: |
From $ 500,000 to $5,000,000 . The maximum Loan to value for the
504 portion of the loan is 40% of the project cost up to $1,300,000
of the total cost. |
| Loan-To-Value: |
up to 90%. |
| Loan Term: |
15-year, 20-year fully amortizing loans. |
| Amortization: |
15-year, 20-year fully amortizing loans. |
| Interest Rate: |
Fixed and Adjustable Rate Mortgages available. |
| Debt Service: |
Minimum 1.2 times. |
| Personal: |
Personal guarantees of the principal owners of the business, and
life insurance to the value of the loan amount are typically
required. In very rare and exceptional cases, personal assets may
be attached. |
| Prepayment: |
Up to 5% declining for 1% per year for 5 years. Other options are
available. |
Eligibility Information
- Maximum company size allowable is $7 million in net worth and $2.5
million in profits
- Must be a for-profit entity
- For new construction of a building, must occupy 67% of space
- For purchase of an existing facility, must occupy 51% of space
- Proceeds can be used for fixed asset acquisition and construction
Financing Option
- Bank provides 10 year balloon (based on a 20 year amortization) for
50% or more of total project costs.
- CDC provides 20 year fixed-rate financing for up to 40% of total
project costs.
- Borrower down payment is based on 10% of total project costs if eligible.
Collateral Requirements
- Must be fully secured via the real estate or machinery based on appraised
value acceptable to the bank and SBA
- Personal guarantee of each 20% or more owner of the operating company
of legal entity holding title to the property is required
Benefits
- Only 10% equity contribution towards the entire project is required
from the borrower
- This program provides very attractive long-term financing for real
estate and machinery purchases
- Soft costs directly associated with the project can also be financed
|
