FAQ for SBA Loans
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SBA  Loan information for the Sacramento area.
Typical  SBA 504 loan structure
Current SBA Loan rates.
SBA loan application package

Frequently Asked Questions

What can the SBA 504 loan program be used for?

  • Purchase land and building
  • Land acquisition, along with building construction
  • Remodeling or rehabilitation of an existing building
  • Building expansion
  • Tenant Improvements
  • Equipment acquisition (with life expectancy of 10 years or more).

What are the minimum and maximum project costs?

  • Minimum of $250,000
  • Maximum of $18,000,000- (depending on overall loan structure).

What is the maximum SBA loan amount?

  • $5,000,000 or $5,500,000 for manufacturing companies and qualified energy efficient facilities.
  • 40% of the project cost for a multi- purpose facility; or up to
  • 35% of the project cost for a special purpose facility (restaurant, gas station, etc.); or up to
  • 35% of the project cost for a startup business (business owned less than 2 years); or up to
  • 30% of the project cost for a startup business in a special purpose facility.
  • There is no maximum loan amount for the Bank financing, but the bank must finance a minimum of 50% of the project cost for a start-up business and/or a special purpose facility.

How can the Bank loan be structured?

  • Amortization - 10 to 30 years for real estate; 7 to 10 years for equipment
  • Term - minimum of 10 years for real estate; minimum of 7 years for equipment
  • Interest rate will be at a market rate (fixed or variable).

How is the SBA loan structured?

  • The SBA loan will be fully amortized for 20 years for real estate; 10 years for equipment.

What Bank Fees are eligible for financing within the program?

  • Normal bank costs such as:
  • Interim Points/Loan fee,
  • Documentation fee,
  • Processing fee,
  • Appraisal
  • Environmental report
  • Title fees
  • etc.

What are the SBA closing costs?

  • Approximately 2.7% of the SBA loan, plus legal costs ranging from $1,000 to $2,500 all of which will be financed by SBA.

How long does it take to get an approval from SBA?

  • 2 to 3 days from receipt of a complete financial package depending on SBA's backlog.
  • GSCDC is an approved PCLP Certified Development Corporation, which allows GSCDC to approve loan requests in-house based on financial strength and urgency of the transaction. Final approval could be as quick as 24 hours from receipt of a complete financial package.

What are the occupancy requirements for the business?

  • 51% if acquiring an existing facility (49% can be permanently leased out).
  • 60% for a new construction project with the potential that the business will occupy some additional space within three years, and a total of 80% within ten years. The balance of the building (20%) can be permanently leased out.

Can the subject property be owned personally and leased to the business?

  • Yes. In addition, the ownership in the real estate does not have to be the same as the ownership of the business, but a guarantee by the business and the property owners will be required.
  • In addition, the buyer/borrower does not have to have any ownership in the business, but the business and any 20% owner of the business must be a guarantor on the SBA loan.

What about an Environmental Report?

  • An environmental questionnaire is required on all properties.
  • A TSA is required on all properties, except bare land that has never been farmed.
  • A phase I environmental report may be required if additional investigation is needed.

What about an Appraisal Report?

  • The appraiser must be qualified to prepare a commercial real estate appraisal report.
  • Submissions to SBA can be subject to receipt of an appraisal report.
  • Complete appraisals are generally required. Bank staff appraisers must be pre-approved by SBA.

What are the eligibility issues of the SBA 504 program?

  • The business, plus affiliate companies, must have a net worth of less than $15.0 million.
  • The average net profit of the business and affiliates cannot be more than $5.0 million after taxes in the last two years.
  • The business must create and/or retain jobs and/or meet one of the following Public Policy goals:

1) Expansion of an Export business (at least 10% of last year sales must be from export sales),

2) Expansion of a Minority owned business (at least 51%).

3) Woman Owned (at least 51%).

4) Veteran Owned (at least 51%).

5) Subject property is located in one of the following areas:

a) Rural community; or

b) Enterprise Zone (federal or state designated); or

c) Redevelopment Area (low/moderate income area with slum and blight); or

d) Hardship community due to federal budget cutbacks (i.e. base closures).

For additional questions and/or clarification regarding the SBA 504 program, please contact us directly .

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