A quick overview of the SBA 504 guaranty loan program which provides loans for purchasing fixed assets such as commercial real estate and equipment.

1. 5/2011
A Quick Reference Guide
Specializing in the SBA 504 loan program partnering with North Texas CDC and ACCION Texas
CDC to deliver a high quality experience for our lending partner and borrowing client.
SBA 504 Traditional Financing
The 504 loan program is SBA’s economic development tool Structure
designed to provide co-lender financing for the acquisition
of capital equipment and real estate. The programs
purpose is to provide support to new and existing Bank
businesses who are creating jobs, retaining employees and SBA/CDC
increasing productivity to be an overall economic
contributor to the community. Borrower
QUALIFICATIONS: LOAN MAXIMUMS:
 New or Existing Business (Must be For Profit)  $5,000,000. ~ Basic Loan
 Business Purchase For Business Use (Owner Occupied)  $5,000,000. ~ Public Policy Goal
 Tangible Net Worth Not to Exceed $15 Million  $5,500,000. ~ Manufacturers
 Net Income (2 Year Average) Not to Exceed $5 Million  $5,500,000. ~ Energy Consumption Reduction
 $5,500,000. ~ Energy Production
ELIGIBLE USE OF FUNDS:
 Land OCCUPANCY REQUIREMENTS:
 Acquisition of Existing Building  51% When Purchasing an Existing Building
 New Construction (Renovations & Expansions are Eligible)
 Fixed Assets  60% Ground Up Construction (Must Grow into 80%
 Building Expansion Within 10 Years)
 Capital Equipment INTEREST RATES & TERMS:
 Professional Fees (Relevant Soft Costs)  Fully Amortized Over Life of Loan (20 Years)
 Lenders interim Points and Interest  Fixed Interest Rate For Life of Loan
INJECTION REQUIREMENTS FOR BORROWER:  Real Estate Typically 20 Years
 10% ~ Established Business (2+ years)  Equipment Typically 10 Years (Useful Life)
 15% ~ Either a New Business OR Special Use Building  Rate Locks In When Debenture is Sold
 $20% ~ BOTH New Business AND Special Use Building DEBT REFINANCING:
 Interim/Bridge/Construction Loans (term less than 3
PUBLIC POLICY GOALS:
years)
 Rural Development
 Expansion Loans:
 Revitalizing Economic Development Areas
 Debt to be Refinanced 50% of New Expansion
 Woman, Minority or Veteran Owned (51% Owner)
costs – AND-
 Expanding Exports
 10% Improvement to Cash Flow
 Areas Impacted by Federal Budget Cutbacks
 OR Balloon Payment Due
 Building/Enhancing a Sustainable Building
 Current Last 12 months
*Aids in reducing job creation requirements/increasing available funds
 Temporary Jobs Act Refinancing:
JOB CREATION/RETENTION:  Loan Must be Over 2 years Old
 1 Job per $65,000 in Debenture Proceeds  504 Eligible Proceeds
 1 Job per $75,000 in Labor Surplus/ Enterprise Zones  Current Throughout Historical Payment
 1 Job per $100,000 for Manufacturing  Approved Before 9/27/12
 Green Public Policy Goals Waive Jobs Requirements *Program continues to change – call for details
BENEFITS TO LENDER: BENEFITS TO BORROWER:
 50% Loan To Value  Low Injection Requirement = Preserve Working Capital
 1st Lien Position & Personal Cash
 Stand Alone Loan – NO SBA Maintenance  Long Term Financing
 Creative Structure Allows Lender to be More Competitive  Competitive Rates (Fixed SBA)
 Finance Soft Costs  Soft Costs & Loan Fees Rolled In
 Provide a Low Injection Program for Clients  No Additional Collateral Required (Usually)
 Strengthen Lender Portfolio/Minimize Risk  Loan Is Assumable (Allows for Exit Strategy)
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