Generally, it’s between 30 to 60 days. We offer a swift pre-qualification within about three days after receiving limited financial data.

Absolutely, under specific conditions. It’s advisable to consult one of our loan experts for detailed insights.

There are charges, including a 2.65% SBA fee of the loan’s SBA portion, plus an SBA-designated attorney’s fee for reviewing the loan package. Notably, all SBA fees can be financed.

Eligibility for an SBA 504 loan requires a business to operate for-profit in the United States, have a tangible net worth of less than $20 million, and an average net income of less than $6.5 million after federal income taxes for the preceding two years prior to application. The project being financed must also promote business growth and job creation.

SBA 504 loans are specifically intended for major fixed asset purchases, such as real estate or equipment, while SBA 7a loans have a broader range of uses including working capital and inventory. Benefits of the SBA 504 program include lower down payments and fixed interest rates, whereas SBA 7a loans offer greater flexibility in terms of loan amount and usage but may have variable rates.

The interest rates for SBA 504 loans are fixed and typically below-market, as they are bonds sold to investors. Fees may include processing fees, servicing fees, and a guarantee fee, and these contribute to the overall cost of the loan but are commonly rolled into the loan principal.

Startups less than two years old may qualify for SBA 504 loans but are often subject to special requirements such as a larger equity contribution from the owner, which could be about 15% to 20%. A strong business plan and management experience are important factors in approval for startups.

Financing through the SBA 504 program is eligible for real estate purchases that involve owner-occupied commercial property. This means that the borrower must occupy at least 51% of the property for existing buildings or 60% for new constructions, with plans to occupy a majority of the space over time.

A good DSCR for an SBA 504 loan is typically above 1.25x. This indicates that the borrowing entity generates sufficient income to cover its debt payments by a margin that is considered safe by lenders.

The DSCR is a key determinant of eligibility for SBA 504 loans. If your DSCR is below a lender’s required minimum, usually around 1.25x, your loan application might not be approved because it suggests a higher risk of default.

To calculate the DSCR for SBA 504 financing, divide your business’s annual net operating income by its total annual debt service (the total amount of principal and interest payments for the year). A DSCR higher than one means your business earns more income than its total debt payments.

The SBA 504 loan program, often used for real estate financing, requires a DSCR that reflects the property’s ability to generate enough rental income to exceed its debt service, ensuring the loan is secure and the project is viable.

The DSCR is one of the most critical financial metrics in the SBA loan approval process. It helps lenders assess the financial health of a business and its ability to repay the loan, significantly influencing the decision to extend credit.

The DSCR is one of the most critical financial metrics in the SBA loan approval process. It helps lenders assess the financial health of a business and its ability to repay the loan, significantly influencing the decision to extend credit.

While DSCR is pivotal, lenders also consider other financial metrics, such as loan-to-value ratio, credit history, profitability, and cash flow, when evaluating eligibility for an SBA 504 loan. These metrics give a comprehensive view of a borrower’s financial position.

A personal guarantee is typically mandatory for all owners of 20% or more of the borrowing entity when obtaining an SBA 504 loan. This ensures that these key owners are personally liable for loan repayment in the event of a default.

A personal guarantee reduces risk for lenders, as it provides an additional layer of security.

In most cases, an SBA 504 loan requires a personal guarantee.

If a borrower defaults on a 504 loan with a personal guarantee in place, the SBA can pursue the personal assets of the guarantor to recoup the loan amount. This can include personal savings, real estate, or other valuable assets.

While personal guarantees are a standard requirement across various SBA loan programs, the specific terms and conditions may vary. For instance, SBA 7(a) loans may have different guarantee requirements or percentages based on the loan size and borrower qualifications.

SBA disaster loans may have different requirements regarding personal guarantees. Depending on the loan amount and the borrower’s financial situation, the SBA may waive the personal guarantee for loans under a certain threshold, which is generally not the case with 504 loans.

To be eligible for refinancing with an SBA 504 loan, businesses must be for-profit and fall within the size standards set by the SBA. The asset to be refinanced should be 51% owner-occupied for existing buildings or facilities, and the project refinanced must benefit the business and help preserve jobs.

SBA 504 refinance rates typically offer below-market, fixed interest rates, which can be more favorable than conventional loan rates. These rates are set when the SBA loan funds.

An SBA 504 loan refinance can cover several expenses including existing mortgage debt, appraisals, environmental reports, fees, and closing costs. It cannot be used for working capital, inventory, or consolidating debt that is not secured by fixed assets.

The maximum loan amount for an SBA 504 refinance can go up to $5 million for most projects. However, certain energy-efficient or manufacturing projects may qualify for a higher limit of $5.5 million.

SBA 504 loans typically include a prepayment penalty that decreases over a 10-year period for a 20-year loan and a 25-year loan. The penalty is highest in the first year and decreases incrementally each year thereafter.

Applying for an SBA 504 Loan is as easy as applying for a conventional bank loan. There are only a couple of additional documents required by SBA that are not used by any bank. All other information is shared between NSDC and the bank of your choice. To apply for a loan, first contact one of the following NSDC staff members to discuss your options.