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Borrower FAQs

504 ADVANTAGES

Why the SBA 504 Program works for you

With a low down payment, low fixed interest rate and fully amortized loan, you will have more capital available to expand your business. Not only are there tax advantages, but a real estate purchase with a fixed rate loan results in overall lower and predictable occupancy costs. The lender provides first mortgage funding of 50% of the total project cost, with SBA funding 40%.
Advantages of purchasing real estate:

  • Real estate appreciation
  • Tax advantages
  • Fixed occupancy costs

Advantages of the SBA 504

  • As little as 10% down payment
  • Below-market fixed interest rate
  • Fully amortizing 20-year loan

504 ROADMAP

Planning for Growth

Bringing the right experts together is important to the success of any project. That's why it is important that you have all the information right from the start. As one of the leaders in SBA 504 lending, GCDC have the knowledge to make the financial process faster and easier for all parties. We lay the foundation for a successful and seamless loan process.

Finance Process

Required documentation for loan package is collected from the business
GCDC analyzes and organizes documents and information
Loan package is completed
Loan package is submitted to SBA
GCDC works closely with your first mortgage lender, escrow officer, broker and CPA to reduce redundancy and streamline the process, ensuring that nothing holds up your needed financing.

Bank Financing Completed

Lender approves loan
SBA approves loan
Environmental and appraisal are reviewed and approved
The lender closes the first mortgage and interim second mortgage loans. CONGRATULATIONS!!! You own your building.
A GCDC attorney works with the business to prepare closing documents for a permanent SBA loan
504 Financing COMPLETED

FAQS

WHY SHOULD I CONSIDER AN SBA 504 LOAN FOR MY PROJECT FINANCING NEEDS?

An SBA 504 loan is a powerful tool to help your business grow. It offers:

  • 90% financing allows the business to preserve working capital for business expansion
  • Low monthly loan payments
  • A variety of options for interest rates from a first mortgage Lender
  • The ability to finance the SBA fees into the loan which reduces cash needed upfront to inject into the project.

  HOW CAN MY 504 FUNDS BE USED?

loans may be used for:

  • Land or building acquisition
  • Building construction or remodeling
  • Acquisition of fixtures and heavy machinery

The qualifying business must become the primary occupant of the property financed. Proceeds cannot be used for working capital or costs unrelated to the project.

HOW LONG DOES IT TAKE TO OBTAIN APPROVAL FOR AN SBA 504 LOAN?

With complete information and documents, GCDC can approve your SBA 504 loan for as little as 3-5 business days. We routinely meet the demands of a 45-day escrow. We recommend bringing us into the process early in order to discuss the project timing.

WHAT IS THE MINIMUM DOWN PAYMENT REQUIRED?

A minimum down payment of 10% is required for most 504 projects. However, a 15% down payment is necessary when a business is a start-up enterprise (less than 2 years old) or when the project property is considered special-purpose. A 20% down payment is required in situations involving both a start-up business and a special-purpose property.

HOW MUCH DOES A 504 LOAN COST?

When your loan closes and your SBA 504 loan is funded, you'll incur various fees totaling approximately 1% of the financing package. These fees are financed within the SBA loan proceeds so they are NO OUT-OF-POCKET expenses.

WHAT WILL BE MY INTEREST RATE ON THE SBA 504 LOAN?

The interest rate on the loan will be determined by a market sale of the bond at the time the 504 debenture pool (the pool of 504 loans) is sold and the interest rate will be fixed for the term of the loan. It is this 100% government guarantee that experts predict will enable the bond to be funded at below conventional lending interest rates and on a fixed rate basis. The effective rate (which includes all ongoing fees) is roughly equal to the 10-year Treasury bill rate when the debenture is sold, plus approximately 2.2-3.4%.

WHO IS ELIGIBLE?

Independently-owned, for-profit businesses that meet 504 project requirements are eligible. Net worth must be $15 million or less, and the average net profits after taxes cannot exceed $5 million per year for the previous two years.

CAN I OBTAIN ANOTHER SBA 504 LOAN?

YES!  A Borrower may obtain a second or even a third SBA 504 Loan to finance additional locations, expand existing locations, or purchase major machinery and equipment.