SBA Loans - Fueling the Growth of Small Businesses

Virtually any business purpose can qualify for a long-term SBA guaranteed loan, including:

• Commercial real estate purchase
• Construction
• Business acquisition or expansion
• Equipment / Inventory purchase
• Refinance
• Working Capital

Types of SBA Loan

SBA Real Estate Loans

The buyer/borrower must be an owner-user occupying a minimum of 51% of an existing structure, or 60% of newly constructed buildings. Terms of 20-25 years. Qualified properties include:

• Free standing industrial & commercial buildings
• Office, medical and industrial condominiums
• Hotels & motels
• Improvements on leased land
• Restaurants
• Franchise specialty buildings
• Steel buildings

SBA Non-Real Estate Loans

• Up to $1 million available
• Terms of 10 years
• Proceeds used for working capital, inventory, equipment, business acquisition, debt refinancing

SBA Loan Programs

The 504 program allows small and medium-size businesses to obtain long term, fixed rate financing at below market rates for up to 20-25 years.

A primary lender covers 50% of the project costs, a Certified Development Company (CDC) financed 40% of the project costs through the SBA-guaranteed debentures, and the small business invests at least 10% of the project costs (15% of eligible project costs for start-ups or special use properties / 20% of eligible project costs for start-ups and special use properties)

• Project size $250,000-$10,000,000
• For real estate, machinery and equipment
• Fully amortized fixed or floating rate ( 1st mortgage) / below market, fully amortized fixed rate for 20 years (2nd mortgage)
• Terms of 20-25 year for real estate, 10 year for machinery and equipment
• Up to 90% loan-to-cost (90% financing of eligible project costs, including renovations, closing and soft costs)
• Equity in land will be considered down payment if already purchased
• Prepaid soft costs such as architectural or engineering fees will be considered for the total project costs and down payment
• Only the real estate and / or equipment being financed to be used for collateral 
• Both loans are assumable
• Personal guarantees required, but it can be limited to pro rata ownership with strong credit
• Minimum FICO 600

Eligible Borrowers

• For profit, non-publicity traded businesses
• Tangible business net worth, including affiliates, not to exceed $7,500,000
• Average net income of the business not to exceed $2,500,000 over the previous two years
• Personal liquidity of each principal/guarantor not to exceed the total projects costs of the proposed 504 loan
• Management experience
• Ownership must be composed of 51% U.S. citizens or resident aliens

Ineligible Borrowers

• Non profits
• Passive holders of real estate and / or personal property
• Lending institutions (mortgage brokers and correspondent lenders are eligible)
• Life insurance companies (franchised agents are eligible)
• Businesses located in a foreign country or owned by aliens
• Businesses selling products / services through a pyramid plan
• Illegal businesses
• Gambling concerns
• Businesses which restrict patronage
• Government owned entities (Native American Tribes are eligible)
• Businesses engaged in promoting religion
• Consumer and marketing cooperatives (producer cooperatives are eligible)
• Businesses engaged in loan packaging
• Businesses owned by persons of poor character
• Businesses providing prurient sexual material
• Businesses that have previously defaulted on a Federal loan
• Businesses engaged in political or lobbying activities
• Speculative businesses

Ineligible Use of Funds

• Refinancing
• Inventory
• Working capital
• Furniture and equipment with life les than 10 years
• Good will and covenant not to compete portions of business acquisition
• Closing costs
• Franchise fees
• Incorporation and organizational expenses
• Management or counseling fees
• Finders fees and broker fees
• Origination and commitment fees