The SBA 504 loan program provides long-term, fixed-rate financing to facilitate the purchase of owner-occupied commercial real estate. It allows borrowers to obtain low down payment loans of up to $5 million for projects ranging from $400,000 to $12.5 million. The program utilizes a 50%/40%/10% structure whereby a private lender finances 50% of the project cost, the SBA finances 40% through a 504 loan, and the borrower contributes 10%.

1. 1
Purpose of the SBA 504 Loan Program
Economic development program to facilitate the purchase of
owner‐occupied commercial real estate.
What is SBA’s defini on of owner‐occupied?
New Construc on
60% Owner‐Occupied
20% Lease Forever
20% Leased with
Plans to Occupy*
Ryan Richardson—Loan Program Manager —530‐225‐2760 x206
Exis ng Facility
51% Owner‐Occupied
49% Leased

2. 2
4 Uses of the SBA 504 Loan Program
1. Purchase Land & Exis ng Building 2. Purchase Land & Construct Building
3. Expand Exis ng Facility with Refinance 4. Refinance Owner Occupied CMRE
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206

3. 3
Project Structures
1. Typical Project—50%/40%/10% 2. Single Purpose—50%/35%/15%
3. New Business—50%/35%/15% 4. New & Single Purpose—50%/30%/20%
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206
SBA has a list of 27 single use proper es

4. 4
SBA 504 Benefits
1. 10% Borrower Injec on* 2. Below(ish) Market Interest Rates
3. 20‐Year Fixed Rate 4. Finance Closing, So Costs & SBA Fees
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206

5. 5
SBA 504 Target Client
 Wants to Purchase Owner‐Occupied
Commercial Real Estate
 Owned their business for 3‐5 years
 Has a desire for a fixed interest rate
 Has cash injec on
*******************
 Special Use Facility
 Bank looking to reduce exposure
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206

6. 6
Size of SBA 504 Projects
Largest Smallest
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206
Borrower can have $5MM in SBA 504
assistance and assuming 50/40/10
structure the project could go up to
$12.5MM*
*technically it could go higher, but we live in Redding
and I haven’t seen too many $12.5MM deals
$400M total project is a good
star ng point
Easier ways to finance small projects
Good vs. Bad Profits

7. 7
Size Restric ons (Including Affiliated Companies)
2‐Year average profit AFTER tax of $5.0MM
Tangible Net Worth of $15.0MM
What are affiliated companies?
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206
If the borrower or guarantor have the ability to control another company
through management or ownership then it is an affiliated company.
Affiliated companies are added to the opera ng company for size standard
purposes. Check Schedule E for the 1040 and get K‐1s to determine affilia on.

8. 8
Eligible Passive Company & Opera ng Company
The EPC is the borrower and they lease the land & building to the OC. The OC is the
business en ty genera ng revenue to pay the bills.
Does there have to be and EPC/OC rela onship? ‐ No
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206
Who has to personally guarantee the loan? ‐ Anyone who owns 20% or more
of the EPC and/or OC.
Does the EPC and OC have to have mirrored ownership? ‐ No

9. 9
SBA 504 Underwri ng Criteria
Job Crea on or Reten on—Mostly waived in our area
Does the project cash flow? Projec on based deals are okay (expansion or start‐up)
SBA normally just takes the subject collateral as collateral.
What kind of extra paperwork is needed?
SBA 504 Applica on—Signature Only
SBA Form 912—Statement of Personal History
SBA Form 413—Personal Financial Statement
** Takes about an extra 10 minutes to complete **
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206

10. 10
How Long Does It Take To Get Approval?
SCED Loan Commi ee
SBA 504 Authoriza on
Appraisal Approval
Environmental Approval
What are the fees associated with the SBA 504?
Approximately 2.2% of SBA loan plus $2,500
(financed into SBA loan)
Borrower pays $750 a orney opinion fee & $55 tax serv.
Lender (you) to pay a 50 basis point fee on the
permanent (your) por on of the loan
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206

11. 11
How to Find Me
Ryan Richardson
Loan Program Manager
530‐225‐2760 x206 Office
530‐722‐5726 Cell—Lender’s Hotline
rrichardson@scedd.org
scedd.org
facebook.com/sced504
Twi er.com/SCED504
linkedin.com/company/superior‐california‐economic‐development/
Ryan Richardson—Loan Program Manager—530‐225‐2760 x206