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The SBA 504 Loan has lower down payment requirements and also provides 20/10 year fixed rates. Having fully fixed rates reduces the risk of rate volatility over the life of the loan which provides certainty and makes the 504 loan a competitive alternative.

By putting less money down, the business is able to save liquidity and reinvest that within their firm.  Putting 20% down can be cost prohibiting for many small businesses.

The following table depicts a comparison between the SBA 504 Loan and a conventional loan:

SBA 504 Loan Conventional Bank Loan
Loan Amount Up to 90% financing (inclusive of land, construction / renovations, soft and closing costs) 60% to 80% financing (depending on the property type)
Equity As little as 10% of the total project costs 20% to 40% plus closing and soft costs
Term 10 or 20 years fixed (no balloons or rate variability) 3, 5, 7 or 10 year balloons
Amortization 10 or 20 years Typically 20 years
Pricing Fixed for the full term indexed off of the 10 year treasury yield Variable or fixed for the term of the loan
Personal Guarantees Required by 20% or more owners Typically Required
Prepayment Penalty For the SBA loan there is either a 5 or 10 year prepayment Varies by lender
Fees Overall costs are typically 1.5% of the total project cost with the ability to finance the majority of the costs Typically 1% of the loan amount
Personal Credit Scores No specific requirement; however, lower scores will require thorough explanation Varies by lender
Economic Development / Public Policy Requirement Required for all SBA 504 Loans Not a requirement

The following table depicts a comparison between the SBA 504 Loan and the SBA 7(a) Loan.

SBA 504 Loan SBA 7(a) Loan
What is primarily financed? Real estate and heavy equipment

Refinance of commercial debt associated with prior real estate or equipment debt

Working capital, inventory, equipment, stock, or any other business asset and/or debt to be refinanced
Why is the program typically used? Low down payment and long term fixed rates Ability to enhance credit, low down payments, mitigate collateral shortfalls
Loan Structure 1st mortgage made by lending partner

2nd mortgage SBA / FBDC loan

Typically a single loan made and serviced by a 7(a) provider
Loan Size $150,000 – $25 million $150,000 – $5 million
Interest Rate 1st mortgage: conventional pricing

2nd mortgage: below-market fixed interest rate

Typically floating at WSJ Prime +1% up to WSJ Prime +2.75%
Term 1st mortgage 10 year (minimum)

With 20-25 year amortizations

2nd mortgage 10 or 20 years, fully amortizing

Up to 25 years, fully amortizing for real estate

Up to 10 years, fully amortizing for all other uses

Prepayment Penalty For the SBA loan there is either a 5 or 10 year prepayment Typically a 10 year declining prepayment
Fees Overall costs are typically 1.5% of the total project cost with the ability to finance the majority of the costs 3% guarantee fee based upon the entire project amount
Additional Collateral Not a typical requirement Required when the equity in the project is less than 15% of the project
Personal Credit Scores No specific requirement; however, lower scores will require thorough explanation Varies by lender
Economic Development / Public Policy Requirement Required for all SBA 504 Loans Must meet SBA’s 7(a) size standards
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Trusted By Lenders Across The Southeast

Florida Business Development Corporation (FBDC) works with a wide variety of lending institutions that participate in funding SBA 504 loans. These lenders generally fund 50% of the first mortgage loan with a minimum term of 10 years for real estate and seven years for machinery and equipment.
FBDC generally funds up to 40% of eligible cost, with a $5,000,000 maximum. Manufacturers and energy efficient projects are eligible for up to $5,500,000. Total project size is unlimited. The 504 loan rate is fixed for the life of the loan.

121 Financial Credit Union
1st National Bank of South Florida
AFB&T, a division of Synovus Bank
American Enterprise Bank of Florida
AmeriFirst Bank
Ameris Bank
Atlantic Capital Bank
Atlantic Coast Bank
Bank Independent
Bank of America, NA
Bank of North Georgia, a Division of Synovus Bank
Bank of the West
BankUnited NA
Banyan Capital Finance, LLC
Bay Cities Bank
BMO Harris Bank NA
Branch Banking and Trust Company
Bryant Bank
Candence Bank, N.A.
CB&T, a division of Synovus Bank
CBC National Bank
CBRE
CenterState Bank
Citizens Trust Bank
City National Bank
Columbus Community Bank
Community & Southern Bank
Community Bank of Broward
Community Bank of Johnson County
Continental National Bank

Cornerstone Community Bank
Executive National Bank
Fairwinds Credit Union
First American Bank
First Bank Florida
First Citrus Bank
First Colony Bank of Florida
First Home Bank
First National Bank of South Miami
First Partners Bank
Flagship Community Bank
Florida Bank of Commerce
Florida Business Bank
Florida Capital Bank, NA
Florida Community Bank, NA
Fountainhead Commercial Capital LLC
Freedom Bank of America
Gateway Bank of Central Florida
Gateway Bank of Florida
Grow Financial Federal Credit Union
GTE Financial
GulfShore Bank
Hancock Bank
Harbor Community Bank
IberiaBank Corp.
Intracoastal Bank
Jefferson Bank of Florida
JP Morgan Chase Bank, NA
Liberty CP1 SPV, LP
Marquis Bank

Mercantil Commerce Bank, NA
Mercantile Capital Corporation
Midsouth Bank
National Bank of Commerce
NobleBank & Trust, NA
NorthStar Bank
Ocean Bank
Oconee State Bank
Old Florida Bank
Patriot Bank
Platinum Bank
PNC Bank, National Association
Professional Bank
Regions Bank
Reunion Bank of Florida
Sabal Palm Bank
Seacoast National Bank
South State Bank
Space Coast Credit Union
Stonegate Bank
SunTrust Bank
TD Bank, NA
The Bank of Tampa
The Jacksonville Bank
TotalBank
Trustmark National Bank
USAmeriBank
Wells Fargo Bank, National Association
Whitney Bank dba Hancock Bank

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