SBA 504 Loan Structure

  • A private lender (Bank) will provide 50% of the total project costs.
  • Business Lending Partners will provide up to 40%* of the project costs.
  • The borrower will provide a minimum 10%* cash equity injection

*An additional 5% equity is required for a start-up business or when financing special purpose properties, increasing the total equity injection required to 15%-20%.

 

Typical SBA 504 Loan Structure

 

Financing Structure

Existing Business

Start-Up Business

OR

Special Purpose Property*

Start-Up Business

AND

Special Purpose Propety*

Bank

$500,000 (50%)

$500,000 (50%)

$500,000 (50%)

SBA

$400,000 (40%)

$350,000 (35%)

$300,000 (30%)

Borrowers Equity

$100,000 (10%)

$150,000 (15%)

$200,000 (20%)

Total Project Cost

$1,000,000 (100%)

$1,000,000 (100%)

$1,000,000 (100%)

 

Limited or Special Purpose Property - Is a limited-market property with a unique physical design, special construction materials, or a layout that cannot be converted to another use without a large capital investment. Example: Hotel, Car Wash.

 

Start-Up Business –generating the first sale less than two years ago.