EDC Offering Broader SBA Loan Program on EDC Finance Corp | Lancaster New Era June 4 , 2008 By TIM MEKEEL, New Era Staff Writer The Economic Development Co. Lancaster New Era June 4 , 2008 By TIM MEKEEL, New Era Staff Writer The Economic Development Co., once focused on serving traditional smokestack industries, again is reaching out to a new clientele. The Director, Office of Financial Assistance, or his or her designee, may approve a request for extension of the disbursement period for an additional 6 months for good cause. (ii) That is not subject to a guarantee by a Federal agency or department; (iii) Substantially all (85% or more) of which was for an Eligible Fixed Asset. For the purposes of this paragraph (vii), “current on all payments due” means that no payment was more than 30 days past due from either the original payment terms or modified payment terms (whether through a modification to an existing Note or through a refinancing that results in a new Note). These funds generally can be used, in conjunction with bank financing, to fund up to 90% of eligible project costs. SBA 504 Loan Requirements - Mercantile Capital How the SBA 504 program works. SBA 504 Eligibility. For purposes of this section, “date of refinancing” refers to the date the 504 loan is approved by SBA. Funds for the 504 portion of the project come from SBA Guaranteed Debentures issued by CDC’s, and are sold in the private bond market, typically around 40% of the total project cost. Be sure to consult a BLP financial professional prior to relying on the results. Such Note must be subordinate to the 504 loan if the Note and the 504 loan are secured by any of the same collateral. Eligible Project costs which may be paid with the proceeds of 504 loans are: (a) Costs directly attributable to the Project including expenditures incurred by the Borrower (with its own funds or from a loan) to acquire land used in the Project, or for any other expense directly attributable to the Project, prior to applying to SBA for the 504 loan; (b) In Projects involving construction, a contingency reserve for cost … If you are considering getting a 504 loan from the Small Business Administration (SBA), you might have questions about closing costs and other fees. PCLP CDCs may not use their delegated authority to approve a loan requiring this exception; (6) The borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing. Lenders. The typical loan structure is the bank provides the senior secured loan at 50% of project cost; the SBA 504 loan is … This program can be taken individually or as Chapter 5 of the 504 Loan Closing Course designed for attorneys and paralegals, CDC managers and staff, and bankers and bank counsel engaged in closing SBA 504 Loans or interested in learning more about integrating the closing process with loan eligibility and packaging and loan servicing. SBA portion $25,000 to $5,000,000 ($5.5 million for energy savings and small manufacturers). 2.450% 10 YEAR. The Borrower contribution is cash or property that is part of the Project Property and is not derived from an SBA Business Loan Program. These include, but are not limited to, the following: (a) Debt refinancing (other than interim financing), except as provided in § 120.882(e) and (g). Existing 7(a) and 504 loans may be refinanced under this section in accordance with SBA policies or procedures; (4) The financing will be used only for refinancing existing indebtedness or costs relating to the project financed; (5) The financing will provide a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are accounted for. Exceptions to the 10% reduction requirement may be approved by the D/FA or designee for good cause. Equipment. This calculator does not calculate the Annual Percentage Rate or Average Prime Offer Rates. The remaining 10 percent (an equity investment) will be your small business owner contribution. That is, the SBA does not set a cost ceiling for your project. Bigger loans: The green 504 is a second mortgage that can be as much as $5.5 million per project. BLP does not guarantee any of the information obtained by this calculator. SBA 504 Loan Program Debt Refinance Overview Northwest Business Development Association. A bank, selected by the applicant, finances 50% of the project and … SUBJECT: 504 Eligible Project Costs, Administrative Costs, and Fees EFFECTIVE: 11 -10 2003 SBA Information Notice No. (g) SBA may approve a Refinancing Project of a qualified debt subject to the following conditions and requirements: (1) The Refinancing Project does not involve the expansion of a small business; (2) The applicant for the refinancing available under this paragraph (g) has been in operation for all of the 2 year period ending on the date of application; (3) The cost to the Federal Government of making guarantees under this subsection (g) and under section 503 of the Small Business Investment Act of 1958 (15 U.S.C. While there are fees for an SBA 504 loan, they are generally not very noticeable to the borrower because most of them are rolled over into the loan. Ownership must be comprised of 51% U.S. citizens or registered aliens with green card. Costs not directly attributable and necessary for the Project may not be paid with proceeds of the 504 loan. (f) For the purposes of paragraph (e), the phrase “project involves expansion of a small business concern” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the small business concern. The CDC/504 Loan Program provides long-term, fixed rate financing of up to $5 million for major fixed assets that promote business growth and job creation. WHO IS ELIGIBLE? If acquired within two years land will be valued at cost. Loan proceeds must not be used to refinance any personal expenses. Borrowers. Qualification for loan programs may require additional information such as credit scores and cash reserves which is not gathered in this calculator. 2.696% 25 YEAR. The SBA 504 Loan program provides financing to eligible small businesses for major fixed assets such as equipment or real estate. Eligible Project costs which may be paid with the proceeds of 504 loans are: Terms Used In 13 CFR 120.882. (2) The existing indebtedness is collateralized by fixed assets. Because up to 50 percent of total project costs are covered by a bank loan, total loan maximums are actually significantly higher. If the Refinancing Project involves a limited or single purpose building or structure, the Borrower must contribute not less than 15% (excluding administrative costs), unless SBA determines, in its discretion, and publishes a notice in the Federal Register, that due to an economic recession, as determined by the National Bureau of Economic Research or its equivalent, Borrowers may contribute not less than 10% for Refinancing Projects involving a limited or single purpose property during the recession. If the acquisition, construction or purchase of the asset was originally financed through a commercial loan that would have satisfied the “substantially all” requirement and that was subsequently refinanced one or more times, with the current commercial loan being the most recent refinancing, the current commercial loan will be deemed to satisfy this paragraph (e)(1). The 504 loan consists of a conventional first mortgage, typically for 50 percent of the project cost, from a third-party lender. The remaining 10 percent will be your … Electronic Code of Federal Regulations (e-CFR), Title 13 - Business Credit and Assistance, CHAPTER I - SMALL BUSINESS ADMINISTRATION, Subpart H - Development Company Loan Program (504), Loan-Making Policies Specific to 504 Loans. There is no maximum project size. A private lender then provides financing amounting to 50% of the total project cost. to eligible 504 project cost is limited to $600,000 (50% of new costs). SBA 504 | Use of Proceeds The Note is subject to any other restrictions that SBA may establish to protect its creditor position, including standby requirements; (8) The Third Party Lender must have a first lien position, and the 504 loan must have a second lien position, on all Eligible Fixed Assets securing the Refinancing Project. These funds generally can be used, in conjunction with bank financing, to fund up to 90% of eligible project costs. This limitation may be waived upon application by the CDC and upon a determination by SBA that the 504 loan is needed for good cause. More. NDC Releases Free Webinar Series For Small Business Owners, Small Business Financial Resources for Your Recovery, SBA and Treasury Announce PPP Re-Opening; Issue New Guidance, Walsh’s passion for small business landed RCEDC newest loan officer. eligible projects costs, reducing the 504 participation to a maximum of 30% of the total project costs. Enter your project costs and current SBA interest rate to estimate your monthly SBA 504 loan payments. (d) Repayment of interim financing including points, fees and interest. SBA 504 loans offer 10- or 20-year fixed asset financing on up to 40% of eligible project costs to qualifying businesses. SBA 504 Eligibility. The SBA 504 program provides a maximum of 40% permanent financing of eligible project costs and takes a second lien on the collateral. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs. Total eligible project cost must be at least $125,000. Project sizes range from $250,000 to $20 million. Therefore, the combined loans (conventional first and SBA second) for one project can exceed $13.3 million. TPL must be equal to or greater than the debenture amount, at least $250,000 in this example. For the purposes of this paragraph, “same institution debt” means any debt of the CDC or the Third Party Lender financing the new project, or of affiliates of either. 504 Loans are typically structured with SBA providing 40% of the total project costs, a participating lender covering up to 50% of the total project costs, and the borrower contributing10% of the project costs. Who is eligible for an SBA 504 loan? Appraisal: A determination of property value. The modification (or refinancing) must have been agreed to in writing by the Borrower and the lender of the existing debt no less than one year preceding the date of application, except that a modified (or refinanced) loan may be allowed if the purpose of the modification (or refinancing) was to extend the maturity date of the loan, including any balloon payment, and if, during the one year period prior to the date of application (i.e., in the months prior to and after the modification or refinancing), the Borrower was current on all payments due, there have been no deferments of any payments, and no additional proceeds were advanced through the modification or refinancing (except to cover closing costs). n Eligible soft costs may be rolled into the project financing n For Expansion Projects – provides debt refinancing opportunity OTHER FEES n After approval, SBA requires the lender to pay a 0.50% lender fee on the first lien amount. 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