The benefits of Partnering with CCD

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CCD will work with you and your client to tailor a financing package that meets program guidelines. We pride ourselves on providing fast, efficient, knowledgeable and honest responses to each transaction. We work directly with your client to package, process, close and service the 504 Loan. CCD provides permanent financing when the project is completed, and the loan is closed. Loan terms can be 10, 20 or 25 years. Please let us know how we can be of assistance on your next 504 loan.

Other benefits include:

• First lien position and low LTV strengthens lender's loan portfolio Fixed interest rate helps you compete for more business
• Secondary market provides additional income opportunities
• Eligible soft costs may be rolled into the project financing

What is the Lender's Role? The first mortgage lender processes its loan as it would any conventional loan request. CCD and the bank can work together to collect documents from the borrower.

Generally, the bank provides "interim" or "bridge” financing while the CCD 504 Loan is a permanent take-out loan. Thus, the bank would provide the full 90% financing up front during the construction, renovation, or closing period based on the 504 loan commitment to take out the applicable portion of the interim financing once the business occupies the property.

At CCD, we strive to be the 504 Loan expert and we help ensure that all SBA requirements are met so our lending partners can focus on the bank portion of the loan.

Why use the SBA 504 Loan Program?

You will have one more solution for your growing business customers who need financing.

If you have an on-going relationship with the borrower and the project makes sense but there are lending limits to consider, or perhaps a credit enhancement is required to get your loan through your approval process, or the customer only wants to pledge the asset being financed, then consider the SBA 504 Loan Program.

The Lender typically has a 50% loan to value ratio in first lien position and you can make a loan to a business customer that might not have qualified for conventional financing. Additionally, the borrower gets to retain more working capital to grow the business with the low-down payment of typically 10%.

How is an SBA 504 Loan/Project Structured?

Typically, CCD provides 40% of the total project cost with an affordable, fully amortized fixed-rate loan. The Lender normally finances 50% of the total project cost. The borrower typically contributes 10% of the total project cost.

What is the Project Size Range?

Total project size is unlimited, but the SBA 504 Loan size range from $80,000 to $5,000,000 (SBA 504 portion up to $5,500,000 for manufacturers meeting SBA defined NAICS codes, and $5,500,000 for projects meeting certain energy goals). The first mortgage loan can exceed 50% of the total project cost, which enables larger projects to take advantage of the benefits of the SBA 504 Loan Program.

What Projects Are Eligible and What Are the Costs?

SBA 504 Loan financing is used to acquire, construct, renovate or expand an owner-occupied facility. It can also be used to acquire major machinery and equipment with a useful life of at least 10 years. In addition to the acquisition and construction costs, the "soft costs" (appraisals, environmental, construction interest, closing costs, etc.) can also be financed into the total project cost. This allows the business to preserve its working capital.

Why Use a 504 Loan for a Project Instead of 7a Loan

The SBA 504 Loan is specifically designed for fixed assets, whereas a 7a loan may have multiple uses. When you make a 7a loan instead of a 504 loan, you may require a greater down payment, and to meet SBA guidelines you may have to tie up additional assets for collateral, not just the project assets. This can put a strain on your borrower. When you make the participating loan on a 504, you have the first lien position, but not a guarantee. Therefore, you have no ongoing fees to pay or reporting to provide. Your only requirements are to notify and work with us in the event the loan goes into default.

The CCD team can provide you with a detailed cost comparison for your project.