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SBA 504 Loan now offered with 25 year maturity
Kirill Abbakumov   on Tuesday, April 17, 2018 at 12:00:00 am

On April 4, 2018, the U.S. Small Business Administration (SBA) announced that it is making available a 504 Loan, and the Debenture that funds it, with a 25 year maturity in addition to the 10 and 20 year 504 Loan and Debenture that are currently available in the 504 Loan Program.

The 504 Loan Program provides long-term financing to small businesses for the purchase or improvement of land, buildings, and major equipment, in an effort to facilitate the creation or retention of jobs and local economic development. Loans are made to small businesses by Certified Development Companies (CDCs), which are certified and regulated by SBA to promote economic development within their community.

The Loan Program is financed by a loan obtained from a private sector lender with a senior lien covering at least 50% of the project cost (the “Third Party Loan”); a loan obtained from a CDC (the “504 Loan”) with a junior lien covering up to 40% of the total cost (backed by a 100% SBA-guaranteed debenture sold in private pooling transactions); and a contribution from the Borrower of at least 10% equity.

This new 25 year 504 Debenture will be made available for 504 Projects that are approved on or after April 2, 2018.