Q: How much paperwork is involved?
A: Any loan requires a standard application with supporting documentation. We will walk you through the process, simplify the requests and handle all of the communications with SBA for you.
Q: What is the turn around time?
A: Once a complete package is received from a lender or borrower, a credit analyst can provide a statement of pre qualification in a matter of days. For a written letter of commitment and loan authorization from SBA the time line is 1 to 2 weeks. From the time of the loan request to the time of disbursement of funds to a lender varies depending on the complexity of the project and how quickly appraisals or environmental reports are completed.
Q: What is the maximum loan amount?
A: The maximum debenture for an SBA 504 loan is between $1.5MM and $4,000,000. These amounts only refer to the CDC/SBA share of the project. The total size of the project is unlimited.
Q: How quickly will you provide funds to me?
A: After a borrower puts in their own contribution of between 10% to 20%; the lender provides the remaining 80% to 90% of the funds. Upon receiving a Certificate of Occupancy, the CDC will initiate the sale of a debenture. The proceeds from the debenture go to the lender, not directly to the borrower.
Q: What if my bank doesn't want to do a 504 loan?
A: Our office will work with any bank or non-bank lender and will handle all of the SBA paperwork for them. Any borrower can call our office directly to receive an application and/or referral to a lender familar with the 504 loan process.
Q: My CPA suggests holding the real estate in my personal name, in order to receive tax benefits. Can I do that with a 504?
A: You can hold the real estate in your personal name or in another legal entity; which will then be referred to as an "eligible passive concern (EPC)". Your business will be the "operating company (OC)" and will lease the space from your EPC. Make this decision as early as possible in the loan process.You will need to provide corporate documents if you form an LLC and all of the paperwork associated with your loan approval needs to be in the correct borrowing entities name.