This combination gives you up to 90% loan-to-value (LTV), which is the most unique aspect of an SBA 504 loan and the highest LTV available on commercial loans.
SBA 504 is always comprised of two separate loans. There are three players:
We (your lender) handle the first loan, while the SBA takes on the second. However, the SBA doesn’t have access to immediate capital to fund your second loan. So, you’ll initially receive both your first and your second loan from us, as your lender. Approximately 45-60 days after receiving funds from us, the SBA will take out your second loan and set a fixed interest rate for your 25-year term.
You sign your commitment letter and pay a small deposit, which applies to your final down payment.
We do an internal credit review, source third party reports, and interface with the local Certified Development Company (CDC).
The CDC submits your loan package to the SBA.
The SBA provides authorization and approval on third party reports.
The interim period is the time between us closing your two loans and SBA takeout of your second loan – typically 45-60 days. This period exists because:
During this holding period, your loan will have an interim interest rate of approximately 7%. Don’t let this scare you – this rate only applies for the interim period (45-60 days) and your payments will be interest-only. Plus, these payments can be financed into the whole deal, resulting in very little or zero cash out of pocket during the interim period.
When the SBA takes out your loan, your rate lowers to match the latest debenture and becomes fixed for the term of your loan.
If you hold an SBA 7a real estate loan, you may be eligible to refinance your floating rate debt with a low-cost, fixed-rate SBA 504 loan. With rates going up through the end of 2023, you can potentially save tens of thousands of dollars on interest payments.
Complete your entire application online through our secure portal.
Register for our secure online portal.
Fill out and submit an online application (takes less than 30 minutes).
Review our SBA 504 document checklist.
Get connected with a loan officer and get your quote.