The CDC/504 loan program is a long-term financing tool focusing on economic development within a community. The 504 Program provides small businesses that require financing with long-term, fixed-rate financing to acquire commercial real estate. 504 loans are facilitated through Certified Development Company’s (CDC). Projects are secured by a 1st and a 2nd Deed to Trust/Mortgage on commercial real estate, meeting SBA qualifications, with a maximum Loan to Value between 80% and 90% depending on the property type.
Standard Project Structure
• 50% LTV Conventional 1st Deed of Trust/Mortgage
• 30% to 40% SBA/CDC 2nd Deed of Trust/Mortgage (depending on property type)
• 10% to 25% Equity Injection (depending on property type)
Maturity and Amortization
• Conventional 1st Deed of Trust/Mortgage – Up to 25 years
• Interim Note – Up to 120 day term with interest only payments
• CDC/SBA 2nd Deed of Trust/Mortgage – Up to 20 years
• Multi-Purpose Properties – Up to 90% LTV (50% Conventional 1st / 40% CDC/SBA 2nd / 10% equity injection)
• Limited or Special Purpose Properties – Up to 85% LTV (50% Conventional 1st / 35% CDC/SBA 2nd / 15% equity injection)
• Office: Professional, Condominium, Medical, Dental, and Veterinarian.
•Hotel and Motel
•Gas Station, Carwash and Automotive
•Construction (Ground up or Improvements
• Industrial: Heavy and Light Manufacturing, Warehouse and R&D Flex
• Retail: General
• Special Use: Assisted Living Facilities, Adult Care, Day Care Facilities, Restaurants, Funeral Homes, Hotels/Motels.
Rate Option / Fees
• Conventional 1st Deed of Trust/Mortgage – Interest rate options include variable, and fixed rate options, 3, 5, 7, 10 or 25 years.
• Interim Loan – Typically prime plus 2.00%.
• CDC/SBA 2nd Deed of Trust/Mortgage – Rate is fixed at market rate set by the SBA, fixed for 20 years.
• Fees total approximately 2.75-3.00 percent of the SBA Debenture and may be financed with loan proceeds.
The subject property must be occupied by a minimum of 51%