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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
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$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
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- 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 2.25% if the loan
maturity is less than 7 years
OR
Prime plus 2.75% if the loan maturity is 7 years or more
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Eligible Business Size |
- Business net worth not to exceed $8.5 million
- Average net profit after taxes for 2 consecutive years not to exceed $3 million
OR
- Meet 7(a) requirements
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- 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
OR
Meet 504 requirements (temporarily applicable through 09/20/10)
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Terms Available and Amortization Periods |
- 20 years fully amortized – real estate loan
- 10 years fully amortized – equipment loan
- No balloon payments
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- 25 years – real estate
- 10 years – equipment, business
acquisition
- 5 to 7 years – working capital
- All loans are fully amortized
- No balloon payments
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Loan Structure |
- 50% bank loan
- 40% CDC loan
- 10% borrower down payment
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- 90% bank loan
- 10% borrower down payment
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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
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- 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
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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
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- 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
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Collateral |
- Generally, the project assets being
financed are used as collateral
- Personal guaranties of the
principal owners of 20% or more
ownership are required
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- 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
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Loan Fees |
- Fees are financed in the 504 loan
- Fees are negotiated for the 50%
bank loan accompanying the
504 loan
- 2009 stimulus legislation temporarily reduced CDC loan fees to .625% (valid for loans approved by 12/31/09)
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- 2009 stimulus legislation temporarily eliminated 7a fees! Valid for loans approved by 12/31/09
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