\nThe SBA 504 loan product continues to be in very high demand.\u00a0 With historically low 25-year fixed interest rates (2.81% in July) and low down payment options (10-15%), it has very quickly become our most popular loan product.<\/p>\n
As great as the 504 loan product is, it is limited to only financing fixed assets like real estate and equipment.\u00a0 For a new construction project, eligible costs typically include items like land acquisition, construction improvements, contingency, soft costs, FF&E, interest carry and finance fees — essentially everything associated with designing and building the self storage facility.<\/p>\n
Since things like start-up costs and lease-up reserve (working capital) aren\u2019t eligible to be included in a 504 loan, we often offer a SBA 7A loan to cover up to 90% of the project\u2019s post construction needs.<\/p>\n
For a recent loan, the borrower came to the bank with a general development budget.\u00a0 We worked with the customer to better define their project costs: obtaining an estimated draw schedule from their general contractor, getting estimates on start-up expenses and overlaying our proposed debt structure to their lease-up schedule to calculate the working capital needed to break even.<\/p>\n
Our knowledge of both loan programs allowed us to break down the project into different SBA buckets and give the borrower access to the best loan product by line item — 504 to build it and a 7A to start up the business and get it to break even.<\/p>\n
As a top ten 504 lender in the country and a Preferred Lender for 7A loans, Bank Five Nine has the ability to tailor our SBA financing solutions to best meet the borrower\u2019s needs.<\/p>\n