SBA 504 Loans:
Provides small businesses access to low cost fixed rate financing with long term payback.
Available in amounts from $100,000 to $5 Million with a term from 10 to 20 years.
Funds may be used for property, to build or expand facilities and for long term equipment.
SBA 504 Technical Assistance:
A loan checklist is provided for each SBA 504 Loan Applicant as Technical Assistance.
The checklist helps guide the loan Applicant as to the documentation required for loan consideration.
- Commercial loans for small to mid-sized business owners.
- Financing for fixed assets; owner occupied commercial real estate, machinery and equipment.
- 90% loan-to-cost financing of total project costs (including soft costs and contingencies).
*Please note that equity of 15-20% is required for start-ups and single purpose properties.
- Fixed Interest Rates with terms of 10 or 20 years. The rate is extremely competitive and compares favorably with short term loan rates.
- Preserves Capital– In most cases, the borrower will have an equity requirement of 10% of the total project costs.
- Competitive Financing– long term, below market, fixed-rate financing.
- Reduces the impact on cash flow due to longer term financing.
- Preserves capital and maximizes cash flow, making SBA 504 financing a very viable financing option for small business.
- The bank has a first lien position with a favorable loan-to-collateral value which minimizes the banks risk.
- Aids the bank in CRA compliance.
- Helps the bank maintain borrowers lending limits.
- The bank can work with borrowers who have limited equity and still meet policy and regulatory guidelines.
- The bank makes its own credit decision and uses its own loan documentation.
- The bank is the first lien holder and will service their loan at all times. Community Development Resources (CDC) is the second lien holder and will, in turn, service their loan at all times.
- There is no SBA paperwork for the bank to complete. Community Development Resources (CDC) staff will work with the borrower at the banks direction.
- The bank sets its own rates and fees. Community Development Resources (CDC) and the SBA require that the bank loan cannot balloon in less than half the term of the Community Development Resources (CDC) loan.
- Tangible business net worth not to exceed $8.5 Million
- Net business profits after taxes not to exceed $3.0 Million average during previous two years.
- Borrowers’ personal, non-retirement, liquid assets (cash, stocks and bonds) cannot exceed the total project cost.
- Non-profits, public companies, speculative development, lending institutions, insurance companies, gambling concerns and private clubs.
Example Project Structures:
Example Loan Structures:
|First Mortgage||$500,000||First Mortgage||$500,000|
|Second Mortgage||$400,000||Second Mortgage||$400,000|
|Equity (down payment)||$100,000||Equity (down payment)||$100,000|
Example Loan Structures:
There are no lending limits with regard to the bank and its first lien-holder position (each individual bank has its own in-house lending limits established).
Minimum 504 loan amount is $50,000 (exceptions possible).
Maximum 504 loan amount is $1,500,000 – $2,000,000 for eligible public policy projects and $4,000,000 for manufacturing projects.
The business must create or retain one full-time employment position for every $65,000 in funds loaned.
Additional Loan Features:
- Must occupy 51% for existing buildings and 60% for new construction projects.
- The 504 loan is fully assumable.
- Financing is available to real estate holding companies wishing to own the real estate and lease back to the borrowers’ operating company.
- Typical property types include, but are not limited to, Office Buildings, Medical Buildings, Industrial and Manufacturing, Franchise Restaurants, Stand-alone Retail, Flagged Hotels, Day-Care Facilities and Assisted Living Facilities.
Ineligible use of Funds:
- Refinancing, unless part of an expansion project.
Working Capital, Inventory, Franchise Fees, Rolling Stock, Business “goodwill”.
Monthly 504 Rate Tables:
Effective interest rates are calculated by Wells Fargo Corporate Trust Services after receipt of debenture pricing provided by the DCF LLC Fiscal Agent every month.
Wells Fargo Corporate Trust Services provides the Effective Rates each month. They are posted here as soon as they are received.
- 20-year debentures are pooled and sold on Wall Street the first Tuesday of the first full week of each month (beginning and including Sunday).
- 10-year debentures are pooled and sold at the same time every other month.
The following list provides tables for each month showing the 504 Effective Rates. The tables are in .pdf format and can be opened using Adobe Acrobat reader.
The Community Development Resources (CDC) portion of the loan is financed by issuing debentures (bonds) guaranteed by the U.S. Government and sold in the private bond market. The issuance of the these bonds provides small business with the ability to access a competitive market to finance their long-term assets much like Major U.S. Corporations. The program is self sustaining and is not subsidized by the American public.
Community Development Resources (CDC) is Nebraska’s newest CDC. Our staff is committed to providing outstanding customer service while always maintaining and enforcing strict confidentiality. Community Development Resources (CDC) looks forward to working with you regarding all your SBA-504 lending needs.
To apply Click the Download Application button below:
download, print, complete application and return it to CDR’s office.