| SBA 504 Loan Program |
|
| Loan Amount |
Up to $1.3 million in rural MN areas. |
| Use of Funds |
Purchase, construction, improvement/renovation of commercial real estate or purchase of |
| Term of Loan |
10 years or 20 years depending on funds use. Real estate would be 20 years |
| % of Financing Available |
Up to 90% of project cost for multi-purpose buildings with an established company. |
| Rate of Interest |
Varies depending on the bond market funding rates; however, once locked, the rate is fixed for the term of the loan (20 years fixed for real estate.) |
| Down Payment (Equity) |
Typically 10% but may be up to 20% for a new company and/or limited use collateral. Equity may be in the form of subordinated financing ie state or local assistance such as TIF, Tax Abatement, MIF loans, etc. |
| Typical Structure |
50% bank lender 1st mortgage/lien, 40% CMDC/SBA 2nd mortgage/lien, and 10% owner equity and/or subordinated debt |
| How Long Does it Take |
CMDC board reviews requests once a month. After CMDC approval, SBA review generally takes 10-14 days. |
| Collateral |
Project real estate and/or equipment. Loan amounts will be limited to the lesser of project cost or appraised value. |
| Personal Guarantees |
Required from all stockholders/partners holding of 20% or more ownership. |
| Eligible Projects |
Nearly all "small business" projects involving real estate purchase or construction and long-lived equipment. The industry dictates the SBA size standards for eligibility but for the most part, most closely held businesses will qualify. |
| Ineligible Projects |
Typically 1 new job for each $50,000 in SBA loan proceeds is required; however, there are exceptions to that rule if the project involves other economic benefits. |
| Fees |
Vary depending on loan size |
