SBA 504 Loan Details
Loan Purpose: Commercial real estate purchase, including equipment or other fixed assets (no working capital).
Loan Amount: $1,000,000 to $8,000,000 (first lien only) total transaction size from $2,000,000 to $16,000,000).
Equity Requirement: Contingent upon type of loan
- 10% down for general purpose real estate acquisition & new construction
- 15% down for startups or special use real estate
- 20% down for special purpose in conjunction with a startup
Working Capital: Is not an eligible use of proceeds
Interest Rate: Competitive Risk Based Pricing:
First Lien from CSB at a competitive interest rate.
SBA 504 debenture second mortgage is a 20-year fixed rate that is normally below market rates
Term: Up to 25 years with no balloons or calls—fully amortizing over the life of the loan.
CSB has a loan term up to 25 years.
SBA 504 debenture second mortgage has a loan term up to 25 years.
Prepayment Penalty: Prepayment penalties will apply.
Fees: CSB generally requires a 1% loan fee on both the 1st and 2nd loans. SBA 504 debenture second mortgage has a SBA loan guarantee fee based on loan size.
Collateral: First lien and second lien on all assets being financed.
Personal Guarantees: For all individuals owning 20% or more. Corporate guarantees of affiliated companies may be required.
Industries: All for-profit businesses that meet SBA eligibility requirement.
Timing: Term Sheets within 24/48 hours of minimum information to qualify, Commitment Letters typically issued within 5 to 10 business days from submission to underwriting and Closing within 45–60 days of signed commitment letter.
Team Effort: A loan decision is required by CSB, the CDC (debenture issuer) and the SBA.