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Small Business Commercial Loans

By Steven Roberts Updated on 7/19/2017

small business commercial loanCommercial loans for purchase or construction of real estate are available as a CDC/504 Loan funded by the Small Business Administration’s “Investment Company Program.” 

The SBA’s Investment Company Program is an alliance of investors with billions available for firms in need of financing for growth. 

CDC/504 Real Estate Loan

The CDC/504 Loan program is designed for capital investment including equipment and real estate. The loan may be used for land, existing buildings, improvements on current buildings and building construction for new facilities. It may also be used to fund long-term depreciating equipment and machinery for production. 

The loan program does not permit the use of funding for inventory, debt or operating expenses.

Loan Program Eligibility

You may wonder what defines a business as small and how to be eligible for investment. The small business category caps itself at a net worth of $18 million with an average of $6 million in net income over a two year period.  

Businesses must meet the following requirements to qualify:

  • US based company operating for profit
  • Must not be a real estate/investment type firm
  • Plans for long term capital or real estate with funding
  • Not currently funded by larger financial institutions
  • Able to repay the loan with future operating cash flow
  • Good standing with previous debt repayment
  • Qualified management and feasible business plan

Application Process Checklist

  • Download and complete the SBA Form 1244, Form 912 and Form 413
  • Gather the ‘Profit and Loss Statement’ and ‘Financial Projection Statement.'
  • Include contact information for owners, subsidiaries, and affiliates.
  • Provide your business certificate/ license and business lease
  • Provide three years of tax returns, business plan, and history
  • Resumes for top level management/owners

Loan Program Terms 

  • The maximum loan amount is between 4-5 million dollars.
  • You must create one job for every $100,000 loaned
  • You must improve the local economy or achieve a public policy goal.
  • The real estate financed will be collateral until the loan is repaid in full with interest.
  • The interest rates are set to fixed 10 or 20-year maturity, slightly above US Treasury rates.
  • The fees for closing are 3 percent and may be paid added to the loan amount for repayment.

Find a “Certified Development Company.”

There are 270 CDC’s across the nation. They work directly with the SBA lenders and are familiar with the guidelines. 

Click here to find a CDC near you. Enter your zip code, then select certified development 

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About The Author:
Steven Roberts
Steven Roberts is an editor for Lender411. He specializes in mortgage and finance. Steven graduated from Cal State Long Beach. Contact him at Steven@Lender411com.

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