SBA 504 Loan Structure

SBA 504 loans have a shared financing structure. Typically, the borrower provides a 10% down payment, a Certified Development Company (CDC) like Self-Help finances 40% of the project, and a third-party lender, generally a bank, finances 50%.

What is Self-Help’s role?

The SBA partners with local CDCs like Self-Help to administer the 504 program. We coordinate among the borrower, the bank partner and the SBA to make sure your loan is a success.

For your 504 project, we’ll:

  • Coordinate with bank partners
  • Underwrite and approve the loan
  • Manage the paperwork to submit the loan to the SBA
  • Service the loan for its full term

 

Eligible uses for SBA 504 loans

  • Purchases of owner-occupied land and buildings
  • New construction
  • Renovation or expansion of owner-occupied commercial real estate
  • Heavy machinery or equipment purchases and moving expenses
  • Debt refinancing of non-government guaranteed owner-occupied commercial real estate and equipment debt
  • Soft costs (e.g., appraisals, title searches, legal fees, etc.)
  • Repayment of interim financing costs

 

SBA 504 loan terms

For equipment loans, the bank portion of the project typically carries a minimum 7-year maturity with 10-year amortization. For real estate loans, the bank portion usually carries a minimum 10-year maturity with 20-year amortization. The Self-Help portion will be either a 10-year (for equipment) or 20-year term (for real estate), fully amortizing.