| Loan Type |
SBA 504 |
| Min Loan |
$350,000 |
| Max Loan |
$2,000,000 – $4,000,000 (#1) |
| LTV |
80% – 90% (#2) |
| Interest Rate |
Fixed, 7.50% – 8.50% (#3) |
| Term |
up to 20 Years (#4) |
| Amortization |
up to 20 Years (#4) |
|
DSCR |
1.25 (#5) |
| Credit Score |
640 (#6) |
| PrePay Penalty? |
10% @ 10 years (#7) |
| Lock Out? |
No |
| Interest Guaranty? |
No |
| Exit fee? |
No |
| Balloon? |
No |
| Personal Guarantee? |
Yes |
| Documents Required |
Please see ‘SBA Document Requirements’ |
| Closing Time |
45 – 60 days (#8) |
| Lender Fee? |
1 point (#9) |
| Broker Fee? |
(#9) |
| Eligible Properties, Transactions |
Most all owner-occupied (#10) commercial income-producing properties (Purchases, Construction) (#11) and Heavy Equipment Purchases |
| Eligible States |
All |
| Other |
1) A 10% LTV seller-held 2nd mortgage is allowed, but only if the seller is willing to put the note on “Full Standby“, meaning interest-only payments. 2) Business Acquisitions: subject-business must be in business for at least 3 years. 3) Borrowers must have industry experience in the subject-business, or a closely-related business. 4) Borrower must be willing to pledge personal/other assets, if available. 5) Life insurance might be required of borrower/guarantor. 6) The SBA 504 loan program does not allow refinancing, only purchases or construction.
|
| Note #1 |
A) Max Loan Amount: Commercial Real Estate (except Manufacturing): $2,000,000; Manufacturing: $4,000,000; B) Seller may provide a 2nd mortgage for any amount in excess of the maximum $2 million loan limit. (See Other #1, above) |
| Note #2 |
LTV: Commercial Real Estate: 80% – 90% CLTV, as follows: 50% LTV from the SBA lender plus 30% – 40% LTV from the SBA/CDC, as follows: Multi-Family & Multi-Purpose: 40% LTV, Special Use (hospitality, gas stations, car washes, etc): 35% LTV, and Start-ups & Special Use (ALFs, Restaurants, etc.): 30% LTV; Major/Heavy Equipment: 80% – 90% LTV.
|
| Note #3 |
Rates: Fixed at closing; SBA/CDC portion (30% – 40% LTV, See Note #2): currently, about 7.5%; SBA lender’s portion (50% LTV, See Note #2): currently, about 8.5%; Manufacturing: currently, about 7.50%.
|
| Note #4 |
Terms, Amortization: Commercial Real Estate: SBA/CDC portion (30% – 40%, See Note #2): rate fixed, 20 years; 20-year amortization; SBA lender’s portion (50%, See Note #2): rate fixed, 5 years; 25-year amortization; Major/Heavy Equipment: rate fixed, 10 -15 years; 10- to 15-year amortization.
|
| Note #5 |
DSCR based on the last 2 years of historical cash flow |
| Note #6 |
Credit: no bankruptcy, last 7 years; no unpaid collections. |
| Note #7 |
PPP (for Commercial Real Estate/SBA loans with amortizations more than 15 years): 10% for 10 years, declining 1 point each successive year (IE, 10% year #1 through 1% year #10); Please see ‘PrePayment Penalty: Subsidy’ |
| Note #8 |
Points: Lenders typically charge 1 point, depending on the deal. |
| Note #9 |
Points: Depending on the deal (and the lender), broker is usually paid by the lender – but not always. |
| Note #10 |
O/O: Purchases: must be 51% owner-occupied, New Construction: 65% owner-occupied |
| Note #11 |
Hospitality Properties: Hotels/Motels generally must be flagged (ie, associated with a major, national chain (like Marriott or Holiday Inn). (There are other, conventional loan programs available for non-flagged hospitality properties.)/td>
|