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Advantages
504 advantages for borrowers
  • 504 debenture is assumable by qualified applicants
  • Low down payment - helps conserve valuable operating capital
  • Borrowers can own the building and lease it back to the operating company
  • Fixed Rate Financing
  • Below market interest rate
  • All project costs can be financed, including acquisition (land and building, land and construction of building, renovations, machinery and equipment) and soft costs such as title insurance, legal, appraisal, environmental and bridge loan fees. Closing costs may be financed.
  • Long-term -10 or 20 years
    • 504 advantages for commercial lenders
    • Reduced risk with 50% loan-to-value-ratio
    • Fixed or variable rate option on bank loan
    • Reduces liquidation risk; in the event of default and liquidation, the SBA typically takes out the holder of the first mortgage.
    • Expanded borrower base
    • Eliminates SBA reporting and servicing requirements; there is no "1502 reporting" or monthly "50 basis point fee" as there are in the SBA 7(a) loan program.
    • Loans can be sold in secondary market
    • Advantages for the community
    504 Program creates new jobs in the community
    • Certified Development Company puts excess revenues back into community
    • CDC markets programs toward minority, women owned, and veteran owned businesses to enhance community diversity
    • 504 Program meets certain Community and Public Policy goals that enhance the vitality and economic success of a community
    • Members of the CDC represent a cross section of the community
    • 504 program allows financing for businesses that otherwise could not obtain financing

    Typical 504 Financing Structure

    Project Costs

    		 Source Lien Funding Limits Rate Term
    Real Estate    		 Term
    Equipment
    50 percent Financial Institution 1st No Limit Market 10 years or longer 7 years or longer
    40 percent SBA 504 2nd $1,000,000
    $1,300,000    		 Fixed 10 or 20 years 10 years
    10 percent Borrower - - - - -

    Enterprise Funding Corporation can help small businesses become more competitive in the marketplace by providing an attractive alternative to conventional financing. To fund the 504 portion of the loan, EF issues debentures that are fully guaranteed by the SBA and sold in the private bond market

    EF will work with you from start to finish to develop a financing package that meets your needs and the 504 program guidelines. Additionally, all the paperwork is taken care of by the staff of EF. To find out if your business qualifies for the 504 Loan Program, please contact our office at any time.

     

    (909) 792-3803