25-YR FIXED RATE
6.51%
20-YR FIXED RATE
6.58%
10-YR FIXED RATE
6.64%
REFINANCE RATE
+0.025%
empowering economic growth
504 loan program
SBA 504 Loans Success Stories
expansion solutions
Purchase a Building
Construct a New Facility
Renovate Your Current Property
Purchase Heavy Machinery or Equipment
Refinance Commercial Mortgage Debt
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How SBA 504 Loans Work
50%
LOCAL BANK
A bank provides a first mortgage for
50% of the total project costs
40%
SBA 504 LOAN
Growth Corp provides an SBA 504 Loan
for 40% of the total project costs
10%
BORROWER EQUITY
The borrower provides a down payment of
typically just 10% of the total project costs
Higher equity requirements exist for start-ups or special purpose properties…the equity required will increase by 5% if one condition exists or by 10% if both.
SBA 504 Loans are made in conjunction with your local bank...so you can keep your lending relationship.
504 Case Study – New Construction
A widget manufacturer that has been leasing space wants to construct a building to facilitate business expansion.
| Purchase Land | $500,000 |
| Construct Building | $1,500,000 |
| Purchase Furniture & Fixtures | $250,000 |
| Soft Costs* | $150,000 |
| Total | $2,400,000 |
*Soft costs can include interim interest and fees, professional fees, a construction contingency, appraisal and environmental costs, etc.
If a bank was willing to finance the project conventionally, it would typically lend up to 80% of the project costs at a floating interest rate with a 15 year amortization and a balloon after three to five years. However, utilizing the 504 Loan Program, up to 90% of the project costs can be financed. The bank lends up to 50%, thereby reducing its risk and corresponding interest rate. Growth Corp lends up to 40% at a fixed rate for 20 years, with a down payment of only 10% from the borrower.
| Conventional | With 504 | |
| Bank | $1,920,000 | $1,200,000 |
| Growth Corp | $0 | $960,000 |
| Borrower | $480,000 | $240,000 |
| Total | $2,400,000 | $2,400,000 |
As shown, the borrower’s equity injection can be reduced by $240,000, thereby conserving cash and providing the necessary working capital to support continued growth. Additionally, cash flow is improved as a result of the longer maturity and potentially lower interest rates.
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SBA 504 LOANS
How Will You Grow Your Business?
877-BEST 504
www.GrowthCorp.com
A Non-Profit Organization Focused Exclusively on Small Businesses
