SBA LENDING

SBA Loans from Security National Commercial Capital

The SBA 504 loan program is a long-term financing vehicle that provides small businesses with long-term, fixed rate loans for up to 20 years for the acquisition of fixed assets (real estate and long-term machinery or equipment) for expansion or modernization or refinance of existing real estate loans.  The program is administered through a local Certified Development Company (CDC), a non-profit corporation that works with the Small Business Administration (SBA) and private sector lenders to provide the needed financing to small businesses.

Typically, a 504 loan is funded in the following manner:

A private sector lender provides 50% (in certain circumstances up to 65%) of the project cost with a loan secured by a first trust deed position. This is normally accomplished with a first trust deed on real estate. Rates for this loan are generally at commercial market rates with interest resets at least every five years.

The CDC (backed by a 100% SBA- Guaranteed debenture) provides up to 40% of the project cost with a loan in a junior position, normally a second trust deed position.  Rates are generally below prevailing market rates and are fixed for a period of 10, 20 or 25 years.

The borrower will contribute at least 10% of the project cost in the form of equity. A portion of the equity can in the form of a fully subordinated seller carry back note.

When funding a real estate transaction under the 504 program, there is a delay of up to 3 months for the CDC to receive funding from the SBA. Security National focuses on providing interim bridge financing to allow the loan to fully fund at closing.  It is paid off when the SBA issues its 20 year fixed rate debentures.

Security National will also arrange private lender funding of the first trust deed loan.