{"id":6335,"date":"2024-06-03T17:35:47","date_gmt":"2024-06-03T17:35:47","guid":{"rendered":"https:\/\/listselfstorage.com\/us\/industry-insights\/?p=6335"},"modified":"2024-10-16T12:10:55","modified_gmt":"2024-10-16T12:10:55","slug":"reduce-down-payments-and-overcome-appraisal-shortfalls-with-sba-504","status":"publish","type":"post","link":"https:\/\/listselfstorage.com\/us\/industry-insights\/reduce-down-payments-and-overcome-appraisal-shortfalls-with-sba-504\/","title":{"rendered":"Reduce Down Payments and Overcome Appraisal Shortfalls with SBA 504"},"content":{"rendered":"


\nWith the Small Business Administration (SBA) 504 loan program, the property only needs to appraise at 90% of the total costs. This buffer can overcome regulatory loan-to-value restrictions for your financial institution.<\/span><\/span><\/span><\/p>\n

Consider this case study<\/span><\/em><\/strong>:<\/span><\/span><\/span><\/p>\n

A prospect wants to buy a $1,000,000 building. You propose lending 80%, or $800,000. However, the appraisal comes back at $900,000. Using the 80% LTV limit, your loan would be restricted to $720,000, requiring the prospect to bring an additional $80,000 in cash, potentially killing the deal.<\/span><\/span><\/span><\/p>\n

The SBA 504 program allows for a 10% appraisal shortfall without changing the traditional 504 financing structure. Your loan could be reduced to $500,000, with an SBA loan of up to $400,000. The down payment could be as little as $100,000 instead of $200,000. Plus, the effective interest rate on the SBA 504 note is approximately 6.56% fixed for 25 years as of May 2024.<\/span><\/span><\/span><\/p>\n

Appraisal shortfall case study comparison with and without SBA 504<\/span><\/span><\/span><\/strong><\/span><\/p>\n

\"\"
Appraisal shortfall case study comparison with and without SBA 504<\/figcaption><\/figure>\n

 <\/p>\n

Contact<\/u><\/i>:
\n<\/span><\/span><\/span>Nick Collins<\/strong> \u2013 VP Commercial Lending
\n<\/span><\/span><\/span>Bank Five Nine
\n<\/span><\/span><\/span>P: 262-560-2016
\n<\/span><\/span><\/span>E: nick.collins@bankfivenine.com<\/strong><\/span><\/a><\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

With the Small Business Administration (SBA) 504 loan program, the property only needs to appraise at 90% of the total costs. This buffer can overcome regulatory loan-to-value restrictions for your financial institution. Consider this case study: A prospect wants to buy a $1,000,000 building. You propose lending 80%, or $800,000. However, the appraisal comes back at $900,000. Using the 80% LTV limit, your loan would be restricted to $720,000, requiring the prospect to bring an additional $80,000 in cash, potentially killing the deal. The SBA 504 program allows for a…<\/p>\n","protected":false},"author":13,"featured_media":3685,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[21],"tags":[],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/6335"}],"collection":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/comments?post=6335"}],"version-history":[{"count":1,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/6335\/revisions"}],"predecessor-version":[{"id":6337,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/6335\/revisions\/6337"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media\/3685"}],"wp:attachment":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media?parent=6335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/categories?post=6335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/tags?post=6335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}