sddc

Program Benefits:

SBA 504: The Money that Makes America Work
There is no better option for financing owner-occupied real estate, equipment and
machinery than the SBA 504 loan program.

Typical Project Structure

50% bank financing
40% CDC financing up to:
$1.5MM for small businesses
$2.0MM if Public Policy goal(s) met
$4.0MM for manufacturers
10% borrower equity minimum
+ 5% for start-up
+ 5% for special-purpose entities

Eligibility

Borrowers must be located in the US, small businesses as defined by SBA, for-profit
entities, and users of assets to be financed. DBFC determines final eligibility.

Program Operation

Borrower applies to DBFC for 504 loan. DBFC applies to SBA for guarantee. Upon
approval and loan closing, DBFC sells a debenture in the private bond market and
re-lends the debenture proceeds to Borrower. SBA guarantees timely repayment to the
bond-holder.

Benefits for Borrower

• Long-term financing (10 years for machinery and equipment and 20 years for
real-estate)
• Attractive fixed-interest rate (10-year Treasury + ~2%)
• Low down-payment (10% minimum)
• Assumable second-mortgage
• Decreasing payments every five years

Benefits for Primary Lender

Lower lender risk because:

• First-lien position with low loan-to value
• Debt service better matched to cash flow
• Working capital invested in receivables and inventory
• Comply with Community Reinvestment Act without the burden of paperwork or
additional staff
• Freedom to set rates and fees competitively on first mortgage