SBA 504 Loans

what is an sba 504 loan

Six Bridges Capital Corporation (6BCC) is an Accredited Lender in the SBA 504 loan product. This accreditation enables us to process 504 loans more quickly and efficiently than many other Certified Development Companies.

The SBA 504 loan product supplies permanent long-term financing for the purchase of fixed assets such as commercial real estate and machinery and equipment of a capital nature, which are defined as assets that have a minimum useful life of ten years. Proceeds of 504 loans cannot be used for working capital.

There are three parts to a typical SBA 504 Loan, as follows:

  1. Conventional bank first mortgage loan of approximately 50% of the total fixed asset costs;
  2. SBA 504 second mortgage loan of approximately 40% of the total fixed asset costs; and,
  3. Borrower’s 10% contribution. If the fixed asset being purchased is special use real estate, a 15% contribution is required by the borrower, and if the property is special use and involves a start-up operation, a 20% contribution is required. Examples of special use properties include: motels, hotels, schools, swimming pools,

    bowling alleys, auto service centers, theaters, sports arenas, dormitories, cold storage plants, tennis clubs, golf courses, marinas, gasoline service/convenience stores, automatic car washes, hospitals, museums, clubhouses, hospitals, surgery centers, urgent care centers, nursing homes, funeral homes, wineries, dairy facilities, and most recreational properties.

Six Bridges Capital Corporation  approves its portion of the fixed asset financing request and works with the first mortgage lender to approve its senior permanent loan as well as the interim construction loan, if necessary.

Details of an SBA 504 Loan

Loan Purpose

The SBA 504 Loan can permanently finance the purchase of real estate, construction or renovation of buildings, and purchase machinery, equipment, furniture, fixtures and project related soft costs. Refinancing of existing debt (limited to 50% of expansion project) may be included in the 504’s total project cost.

Loan Amounts

$5,500,000 – energy consumption reduction or renewable energy generation

Term

The SBA 504 loan has a term of 20 years for commercial real estate and a term of 10 years for machinery and equipment, both fully amortizing.

Source: arcapital.com

Category: Credit

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