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Are You Ready to Buy Purchase Commercial Real Estate For Your Business

Are you interested in buying commercial real estate for your business? An SBA 504 loan is specifically designed to help small businesses buy or build commercial and industrial buildings.  SBA 504 loans can also be used to buy business equipment with an economic life of ten years or longer.

  • 25-year: 2.692%
    (note rate – 1.299%)
  • 25-year REFI: 2.733%
    (note rate – 1.299%)
  • 20-year: 2.653%
    (note rate – 1.203%)
  • 20-year REFI: 2.696%
    (note rate – 1.203%)
  • 10-year: 2.438%
    (note rate – 0.697%)

Includes fees to CDC, SBA and central servicing agent; based on pricing published by NADCO 1-7-2021
The SBA 504 rates listed above are effective from January 7 – February 10, 2021.


What are the Benefits of an SBA 504 loan over regular business loans?

  • Low down payment – with an SBA 504 loan, the business owner pays only 10% down, so you can borrow up to 90% of the total financing needs.  This way you can keep more cash for your business.
  • Long repayment terms – SBA repayment periods are longer than conventional bank loans – 25, 20 or 10 years fully amortized for real estate loans and ten years fully amortized for equipment loans. Your monthly loan payment is more affordable, improving your business’ cash flow.
  • Fixed interest rate – below-market
  • Projected income consideration – SBA lenders consider projected income of a business in addition to historical cash flows. This is particularly helpful for growing businesses.
  • Secondary source of payment less critical – With the SBA-504 loan guarantee, collateral may be less critical in qualifying a borrower for a loan.

Typical SBA 504 Loan StructureSBA 504 pie chart

An SBA 504 loan has three participants:

  • Bank – provides a first trust deed loan for at least 50% of the total project cost.
  • CDC – provides SBA-guaranteed 504 loan for up to 40% of the total project cost, or a maximum of $5 million ($5.5 million for manufacturing businesses and qualifying “green” buildings).
  • Small Business Owner – contributes a down payment of at least 10%.

What Are SBA 504 Requirements?

To qualify for an SBA 504 loan, a business must:

  • Be owner-operated
  • Be for-profit
  • Be organized as a sole proprietorship, corporation, partnership or limited-liability corporation (LLC)
  • Have net worth no greater than $15 million and net profit after taxes below $5 million in the last two operating years

Loan Program Requirements

  • 51% owner occupancy for existing building
  • 60% owner occupancy for new construction; 80% occupancy within 10 years
  • Equipment must have a minimum 10-year economic life

SBA 504 Loan Terms, Rates and Fees

The bank portion of the loan package is typically amortized over 20 to 25 years. Rate term and fees are negotiable between the borrower and bank.

The CDC portion can be offered with term options of ten, 20 or 25 years fully amortized. All fees are financed within the 504 loan.

How Do You Apply For An SBA 504 Loan?

Contact one of our loan officers in your area. They can provide a loan pre-qualification in just 24 hours.

The complete process from application submission to disbursement of funds takes approximately 45 to 60 days, depending on the complexity of the loan. CDC provides a checklist to keep the process simple for the small business owner. We will work with the owner, accountant, banker, or lawyer or and do all the analysis, packaging and SBA interfacing for the borrower.

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