504 projects typically have a 90% LTV and a 50-40-10 structure as follows:
For example, based on a $5 million total project cost, the Bank would provide a 1st mortgage of $2.5 million, the CDC would provide a 2nd mortgage of $2 million, and the Borrower would provide a down payment of $500,000.
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- 10% for the majority of projects
- 15% for new businesses (in operation less than 2 years) or special-purpose buildings
- 20% for new businesses AND special-purpose buildings
Proceeds can be used for one or many of the following:
- Purchase of an existing building
- Renovation of an existing building
- Purchase of land and ground-up construction of a new building
- Purchase of equipment with a life expectancy 10 years or more
- Furniture and fixtures related to business operations
- “Green” equipment such as solar panels and/or energy-efficient improvements such as windows, lighting, insulation – Learn more about the Green program.
- Soft costs
A Certified Development Company (CDC) is authorized by the U.S. Small Business Administration (SBA) to provide SBA 504 loans. The role of the CDC is to assist small and medium-sized businesses in acquiring 504 financing in partnership with a bank or private lender. The SBA requires that the application for every SBA 504 loan originate from a CDC.
There is no limit on the amount of the bank’s 1st mortgage, and therefore no maximum total project cost. The maximum for the SBA/CDC 2nd mortgage (typically 40% of the total project) is:
- $5,000,000 for most projects
- $5,500,000 for manufacturers or energy-saving projects under the Green Energy Program
Contact us to determine what the maximum SBA loan amount is for your project.