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How Much Money Down Do You Need for an SBA 504 Loan?
In this brief video, Beau answers the question, “How much money down do I need for an SBA 504 loan?”
The short answer is 10 percent down for business expansion, 15 percent for startups. But it is a little more complex than that. Watch the video to find out more.
Background
It depends on if it's a business expansion or a startup. The other major factor to note is if it's a special purpose building or property, you get dinged another 5 percent on the LTV (loan to value).
Though CDC/504 loans tend to be conflated with real estate, they are really designed for anything that you log under “property, plant, and equipment.” This means you can use them for purchasing or renovating commercial real estate or for purchasing equipment.
These are some eligible uses for SBA 504 loans:
The purchase of existing buildings
The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping
The construction of new facilities or modernizing, renovating, or converting existing facilities
The refinancing of debt in connection with an expansion of the business through new or renovated facilities
The purchase or upgrade of equipment and machinery
You can’t use an SBA CDC/504 loan to refinance pre-existing debt or for working capital, so if you’re looking for a more versatile loan, then consider the SBA 7(a) loan program.