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There is a prepayment penalty for the first half of the loan term on the SBA 504 loan. In start up situations or single purpose buildings being financed, an equity injection of 15% is required.
The Certified Lender is a permanent lender only. This means the 50% first mortgage lender will have to bridge the Certified Lender's 504 loan portion until the project is complete. The Certified Lender will sell its bond and fund its loan when the c.o. is issued. Interest and fees on the bridge loan can be included in the project costs to be financed.
Fees and Payments
All of the fees on the SBA 504 loan are added to the loan amount so that you can amortize their cost over the loan term. You will sign a note for the 40% of project cost plus the fees.
Payments on the SBA 504 loan are made by ACH debit to the borrowers designated checking account on the first of each month after the loan closes. Payments on the 504 loan are separate from your payments on the 50% first mortgage loan
Frequently Asked Questions
- The borrower must occupy at least 51% of an existing facility
- The borrower must occupy at least 60% of the facility if it is new cosntruction. If the other 40% is rented, the borrower must occupy some rented space during the next three years, and occupy 80% by the end of the tenth year. The balance of the building can be leased out permanently, if desired.
- Yes, you can pay yourelf the loan payments plus taxews, insurance and maintenance
- You can hold title to the property in a trust, corporation, as an individual or others matters, but anyone owning 20% or more must be a personal guarantor on the SBA loan