Frequently Asked Questions


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Email Carolyn Engel at Carolyn@blp504.org

General 

 


Q: What is a Certified Development Company (CDC)?

AA corporation that processes U.S. Small Business Administration (SBA) 504 loans in partnership with Bank, state and/or private money creating a financial assistance package for businesses with funding needs for real estate and equipment.  The SBA takes a second lien on the property or equipment financed at a maximum participation level of 40% of the total funding needs.  SBA certifies corporations to be CDC's and requires they process SBA 504 loans.

 


Q: How Do I apply for a Small Business Administration (SBA) 504 loan?

A: Applying for an SBA 504 loan is comparable to applying for any commercial loan but with many more benefits. Begin by contacting one of our BLP staff members, and we will come to your place of business to further explain the program details. We provide a checklist of what is needed to simplify the process.  We will work with your accountant and lender, and do all of the analysis, packaging, and communication with the SBA for you. Our goal is to simplify the process as much as possible for our borrowers.

 


Q: How do I determine if I’m eligible?
A: To be eligible, each business must operate as a "for profit" and fall within the size standards of small businesses which are set by the SBA.  Under the 504 Program, the business qualifies as small if it does not have a tangible net worth more than $15 million and does not have an average net income more than $5 million after federal taxes for the preceding two years.  However, If these standards are exceeded, the business can still qualify for the program by meeting other SBA size standards based on either number of employees or annual revenue, depending upon the industry.  Loans made to the owner-occupied real estate.  For a quick no cost eligibility screening, please contact a BLP staff member.  (Read more on Eligibility criteria...)

 


Q: Do you finance startup businesses?
A: Yes, startup companies require a full business plan along with detailed information behind their economic assumptions, including a monthly cash flow projection.  The financing structure also changes in that SBA requires an additional 5% cash equity injection from the borrower reducing SBA's participation level in that project.

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Q: Are there job creation requirements?
A: Typically job creation or retention is a need with one job needing to be created or retained for every $65,000 being borrowed from the SBA ($100,000 per job for small manufacturers); however, this requirement can be waived if another goal set forth by the SBA is met. (Read more on the alternative eligibility goals...)

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Q: Can I refinance an existing loan?
A: Yes, but on a limited basis.  SBA currently allows for refinancing only under the following regulation:
  1. Refinancing is done as part of an expansion project.  For example, if a business is adding on to its facility of activities, some of the existing mortgages can be refinanced as part of that financing package.

 


Q: Do you offer financing options other than the SBA 504 loan program?
A: Yes, there are some state and community loan programs that our partners and we offer. We’ll recommend the program that is best suited your needs.

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Q: When can I prepay without penalty?
A: There are declining prepayment penalties that apply to SBA 504 loans. If you wish to prepay, the business needs to notify BLP, in writing, 45 days before the date on which the company wants to pay off the loan. The loan cannot be partially prepaid.  The prepayment penalties are in place for half of the loan life.  For example, a 20-year loan will have advance sanctions for ten years, and a ten-year loan has penalties for five years. (Read more on the prepayment penalties that apply...)

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Q: Can my down payment be other than cash?
A: Yes, the down payment can also be in the form of the value of previously acquired land (which can include building(s), structures, and other site improvements that will be part of the project property).  This value would need to be supported by an appraisal submitted with the loan application.  Additionally, in certain situations the down payment can be borrowed.   

 


Q: Which bank(s) can you partner with?
A: We can partner up with any financial institution of your choice!

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Q: What is your application review process?
A: Applications are considered at weekly loan committee meetings. If approved, following investment committee meeting, the application will be taken into consideration by the executive committee in less than 24 hours. If approved, the final step is to submit the application to SBA for final consideration.

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SBA 504

June 2017

20-Year Fixed Rate:

4.596%

10-Year Fixed Rate:

4.514%

Historical Rate Graph