Overview of SBA 504 Loan Program

1. SBA 504 Program Overview Georgia Small Business Capital

7. Maximum Amount of Loan Up to $4,000,0000 Maximum 40% of project costs ($2,000,000 if within SBA Public Policy Goals) Minimum Amount of Loan $50,000 There is no maximum limit to project size. Project Size Requirements

11. Typical Structure for Established Business Loan Bank - 50% SBA 504 Loan - 40% Owner’s Equity – 10%

12. Typical Structure for a Special Purpose Building OR Start-up Bank 50% SBA 504 Loan 35% Owner’s Equity 15%

13. Typical Structure for Start-Up Business AND Special Purpose Building Bank 50% SBA 504 30% Owner’s Equity 20%

14. Financing on Typical $1 Million Project Loan % of Entity Amount Project Security Lender $500,000 50% 1 st Mortgage CDC/SBA $400,000 + 40% 2 nd Mortgage fees Borrower $100,000 10% TOTAL: $1,000,000 100%

20. Availability of Personal Resources Any business owner of 20% or more can retain personal liquid assets (cash or securities) according to a tiered schedule. Requirements are the same as in the 7(a) program.

23. Comparison Conventional vs 504 Loan Assumptions: Total project costs = $1,000,000 $ 100,000 Owner contribution (10%) $ 900,000 Total financing required (90%) 7.00% Interest Rate on Conventional Loan 25 Amortization on conventional/bank portion 5.50% Rate of interest on SBA loan 20 Amortization on SBA portion

24. Comparison Conventional vs 504 Loan Conventional Financing Scenario - Loan Amount Rate Amortization Interest Paid $900,000 7.00% 25 year $2,390,000 SBA/CDC 504 Financing Scenario - Loan Amount Rate Amortization Interest Paid Bank $500,000 7.00% 25 year $1,328,000 CDC $406,000 5.50% 20 year $ 269,000 $1,597,000

25. Comparison Conventional vs 504 Loan Conventional – Total Interest $2,390,000 SBA 504 – Total Interest $1,597,000 Interest Savings to Business with 504 = $793,000

27. Fees Charged by CDC Financed as part of 504 loan – 2.15% of net debenture CDC Processing Fee: 1.50% Underwriting Fee: 0.40% Covers expense of pooling & underwriting 504 debenture – paid directly to Merrill Lynch Funding Fee: 0.25% Paid to Development Company Funding Corporation Total: 2.15%

31. Effective Rate Rate the borrower actually pays Note rate TBD% Annual Central Servicing Agent Fee 0.10% CDC Servicing Fee 0.625% Loan Loss Reserve Fee 0.021% Effective Rate XX%

41. Example of Estimated Timeline Day 1… Project is complete. Title is transferred to Borrower. All outstanding documents have been submitted to CDC. Day 15… File sent to CDC’s legal department for creation of legal documentation. UCC requests sent to Borrower for signatures (if applicable). Legal documentation sent to Borrower & Banker for review & signatures. UCC filings returned by Borrower & sent into State for filing.

42. Day 60… Legal documentation returned & recorded. Final closing package forwarded to SBA for review. SBA Field office reviews package & forwards to the Central Servicing Agent for next Debenture sale. Day 90… Debenture sale. Interim loan paid down & closing letter sent to Borrower. Day 135… Refund sent to Borrower & file forwarded to CDC servicing department. Estimated Timeline Cont.

44. Responsibilities of the Banker Provide title insurance information to CDC Closing Department as soon as possible Provide an appraisal to the CDC Provide appropriate environmental investigation to the CDC Provide letter stating interim loan is fully disbursed

49. For Your Next Small Business Borrower Planning an Expansion . . . Consider an SBA 504 Loan Contact GSBC to Make it Happen !