How does it work?
Deal Structure -- Financing
You determine the total project cost (hard and soft costs). A bank or other financial institution finances 50% of the cost and takes a first mortgage (lien) position on the assets financed. The CDC, through the SBA 504, finances 40% of the project cost up to a cap and takes a second mortgage position. You can put in as little as 10% equity.
Typical Project:
| Cost |
| Acquisition of building |
$800,000 |
| Renovations |
$100,000 |
| Machinery |
$50,000 |
| Soft costs |
$50,000 |
| Total |
$1,000,000 |
| Financing |
| Bank - first mortgage |
$500,000 permanent loan |
| SBA 504 - second mortgage |
$400,000 permanent loan |
| Equity |
$100,000 |
| Total |
$1,000,000 |
