504 Projects
- Common 504 Loans
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would include any owner-occupied commercial or industrial real estate or equipment financing project:
- Hotels/motels
- Assisted Living, personal care and nursing home facilities
- Day care and child care facilities
- Automobile and motorcycle dealerships
- Gas Station/Convenience Stores
- Fitness Centers
- Restaurants
- Agricultural Expansions
- Typical 504 Structure
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- Conventional Structure is 50%/40%/10%
- Special Purpose or Limited Use Real Estate 50%/35%/15%
- Start-up Projects 50%/35%/15%
- Special Purpose/Limited Use & Start-up Projects 50%/30%/20%
- The 504 Program can be combined with State Loan Programs
- 504 Lending Limits
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- Up to 40% of the "eligible project costs"
- $50,000 minimum
- $1,500,000 maximum ($3.75 million project)
- $2,000,000 maximum for projects satisfying a public policy goal ($5 million project)
- $4,000,000 maximum for manufacturing facilities ($10 million project)
- Eligible 504 Project Costs
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- Land and Building Acquisition
- New Construction
- Building Renovations/Leasehold Improvements
- Major Machinery and Equipment Purchases
- Related Soft Costs
- Acquisition legal expenses
- Bridge loan points and interest
- Construction Contingency
- Professional Fees
- 504 Costs
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- Capitalized Costs = 2.5% added to the principal amount and included in the financing
- Bank Lender Fee = 0,5% of the 1st mortgage amount added to the bridge financing
- Out-of-Pocket Costs = $1,500, application deposit (refunded), title insurance, and CDC legal fees and recording costs for closing.
- Monthly Servicing Fees are included in the "all-in-rate"
- 504 Process
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- Bank and SeedCo secure approvals simultaneously, within 30 days or less of application
- Bank provides bridge loan for SeedCo financing for non-construction and construction related projects.
- Bank and Seedco will close simultaneously for non-construction projects or SeedCo will close after construction complete and a Certificate of Occupancy has been issued.
- SeedCo government-backed loan will be sold within 30-60 days of closing and payoff of Bank bridge loan will occur.
- The result - borrower has two loans, one conventional loan with the Bank and one 504 loan at 90% of the project and 20-year long term fixed rates.