Sample Project

ABC Corporation has been leasing a 10,000 square-foot facility and has about a year left on the lease. The company is growing and the owner has identified an existing 20,000 square-foot-building on the market for $2,250,000 and wants to make an offer but knows he doesn’t have the 20% down payment typically required. You recognize this as an excellent opportunity to use the SBA 504 Loan program and call BEFCOR to confirm that only a 10% down payment is required.

The project works as follows: The bank will finance a $1,125,000 first mortgage for 50% of the total project cost, and BEFCOR will finance $900,000 or 40% of the cost. You advise your customer that by using the 504 loan they will only need 10% of the project cost. You have a great LTV and your customer conserves working capital to further expand the business.

Project ABC Corp
Purchase land & building $2,000,000
Building up-fit $250,000
Project financing $2,250,000
  Amount % Rate Term Payment
Lender Loan $1,125,000 50% 7.0% 20 yrs $8672
SBA 504 Loan $900,000 40% 5.5% 20 yrs $6163
Down Payment $225.000 10%
Total Financing $1,125,000 100% $14,835
  • Lender provides bridge financing until the 504 debenture is sold to finance the CDC/504 portion of the project.
  • Both loans use the same appraisal and environmental Phase I.
  • Bank’s uses its own underwriting policies and sets its own rate
  • CDC/504 loan rate is set at the time the debenture funding the loan is sold.