SBA 504 CDC Debenture Loan Overview
Purpose
Lower down payment, fixed rate, longer amortization.
Eligible Applicants
Any for-profit small business (net worth under $15 million and $5 million in average net income).
Eligible loan purposes
Purchasing buildings and land; construction, expansion, or conversion costs; leasehold improvements; purchase of machinery and equipment; and certain soft costs. The 504 Program can also be used to refinance commercial real estate (CRE) debt as long as it is owner occupied real estate, or for other fixed assets.
Loan Amounts
-
SBA debenture size up to $5 million for regular projects.*
-
SBA debenture size up to $5.5 million for manufacturing projects when meeting a public policy goal.**
-
Support total debt for a project of up to $12.5 million or $13.75 million for manufacturing, depending on existing loan characteristics.
Interest Rate
Interest rates on 504 loans are fixed to an increment above the current market rate for five-year and 10-year U.S. Treasury issues.
Terms
Ten years for equipment and 20 years for real estate.
Major points
Owners must provide a minimum of 10% equity in the project based on the proposed loan amount, with the remaining 90% through banks and the CDC. Start-ups can be required to provide 15%-20%.
*Generally, a business must create or retain one job for every $50,000 provided by the SBA except for "Small Manufacturers" which have a $100,000 job creation or retention goal
**(Business district revitalization, expansion of exports, expansion of minority business development, rural development, increasing productivity and competitiveness, restructuring because of federally mandated standards or policies, changes necessitated by federal budget cutbacks, expansion of small business concerns owned and controlled by veterans (especially service-disabled veterans), and expansion of small business concerns owned and controlled by women.)
|
.png){kind=small}
