SBA 504 Loans

SBA 504 Loan Specialist in West Palm Beach, FL

SBA 504 Loans Explained

The 504 is a small business mortgage loan program for an "owner occupied" business real estate with a 2-loan structure that includes a first mortgage that can be fixed or adjustable and a 20- or 25-year fixed rate 2nd mortgage.

The first mortgage is a traditional bank loan without an SBA guaranty, but the 2nd mortgage is 100% guaranteed by the SBA and what makes the program attractive for lenders, because it substantially reduces the risk for the lender while allowing the borrower to put less down with the possibility of getting a fully fixed first and second mortgage for 25 years.

504 loans can be used for buying commercial real estate, financing improvements within that real estate and purchasing large equipment in  West Palm Beach, Tampa, Orlando, and anywhere else in Florida or Nationwide.

  • Low down payment (typically 10%) conserves your cash

  • Fixed or floating interest rates available

  • Loan amounts up to $15 million             

         we can fund larger projects with our combination debt financing solutions                     

Typical Uses of the SBA 504 Loan

  • The Purchase of a Building, Land and Improvements
  • Renovation, Remodeling, Modernization or Conversion of Existing Facilities
  • Construction of a New Building
  • The Purchase of "Build to Suit" Facilities
  • The Purchase of New (Long-Term) Machinery & Equipment with useful life greater than 10 years


 Experienced SBA 504 Loan Specialist in West Palm Beach, FL

An SBA 504 loan is a small-business loan funded by Certified Development Companies and third-party lenders and backed by the U.S. Small Business Administration. These loans are designed to promote business growth and job creation through the purchase or upgrade of major fixed assets.

These loans can be used to buy land, real estate, equipment, machinery, furniture or fixtures. They can also be used to build or upgrade facilities, including utilities, streets or parking lots. In specific cases, you can also use a 504 loan to refinance debt or change ownership in your business.

How do SBA 504 loans work?

504 loans come from three different sources:

A Third-Party Lender
This is typically a bank or credit union.

A Certified Development Company (CDC)
CDCs are SBA-certified organizations that support economic development in their communities.

The Borrower
This is the small-business owner taking out the loan.
In most cases, the third-party lender provides 50% of the loan, the CDC provides 40% and the borrower provides 10% in the form of a down payment, sometimes called an equity injection. The loan structure may change, however, based on certain circumstances.

The SBA, considers a new business any company in operation for less than two years. 

A limited or special purpose property, is a property with "a unique physical design, special construction materials or a layout that restricts its utility to the use for which it was built." Examples include bowling alleys, farms, gas stations, hotels, theaters, wineries, and others.

Regardless of the specific structure, the SBA provides a 100% guarantee on the CDC portion of all 504 loans.

SBA 504 loan features

SBA 504 loans offer long-term, fixed-rate financing of up to $5 million (up to $5.5 million for select projects).
Your loan amount, interest rates and repayment terms will vary based on your individual business, as well as your CDC and bank.

Loan Amount
$25,000 to $5 million. Energy public policy projects and small manufacturers may be eligible for up to $5.5 million.

Repayment terms
10, 20 or 25 years, based on the remaining useful life of the property being financed

Interest Rates
Rates are tied to the 10-year U.S. Treasury notes and are typically around 5% to 7% of the amount financed.

Collateral
The equipment or property being financed serves as collateral. In some cases, borrowers may be asked to provide additional collateral

Fees
Fees typically include SBA, CDC and bank or credit union fees, which vary. These fees are included in the total loan amount, so a business owner's only upfront cost is the 10% down payment.

Funding Speed
Varies, but generally ranges between 30 and 90 days.

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