SBA

SBA Loans

Use of CDC/504 Loan Proceeds

 

A 504 loan can be used for:

A 504 loan cannot be used for:

 

CDC/504 Loan Program Eligibility

 

To be considered for Certified Development Company(CDC)/504 loan, applicants must meet these eligibility requirements: 

CDC/504 Loan Amounts, Interest Rates & Fees

Loan Amounts

Maximum loan amounts are determined by how funds will be used based on which goal they support from the list below:

Collateral: Generally, the project assets being financed are used as collateral. Personal guarantees of the principal owners are also required.


Maturity Terms: Maturity terms of 10 and 20 years are available.


Interest Rates: Interest rates on 504 loans are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.


Fees: Fees total approximately 3 percent of the debenture and may be financed with the loan.

 

CDC/504 Loan Application Process

 

Once you have decided to apply for a loan guaranteed by the SBA, you will need to collect the appropriate documents for your application. The SBA does not provide direct loans. The process starts with your local lender, working within SBA guidelines.

Use the checklist below to ensure you have everything the lender will ask for to complete your application. Once your loan package is complete, your lender will submit it to the SBA. 

  1. SBA Loan Application – To begin the process, you will need to complete an SBA loan application form. Access the most current form here: Application for Business Loan - SBA Form 1244.
  2. Personal Background and Financial Statement – To assess your eligibility, the SBA also requires you complete the following forms:
  3. Business Financial Statements – To support your application and demonstrate your ability to repay the loan, prepare and include the following financial statements:
  1. Ownership and Affiliations – Include a list of names and addresses of any subsidiaries and affiliates, including concerns in which you hold a controlling interest and other concerns that may be affiliated by stock ownership, franchise, proposed merger or otherwise with you.
  2. Business Certificate/License – Your original business license or certificate of doing business.   If your business is a corporation, stamp your corporate seal on the SBA loan application form.
  3. Loan Application History – Include records of any loans you may have applied for in the past.
  4. Income Tax Returns – Include signed personal and business federal income tax returns of your business’ principals for previous three years.
  5. Résumés – Include personal résumés for each principal.
  6. Business Overview and History – Provide a brief history of the business and its challenges. Include an explanation of why the SBA loan is needed and how it will help the business.
  7. Business Lease – Include a copy of your business lease, or note from your landlord, giving terms of proposed lease.
  8. If You are Purchasing an Existing Business – The following information is needed for purchasing an existing business:

7(a) Loan Program Eligibility

SBA provides loans to businesses; so the requirements of eligibility are based on specific aspects of the business and its principals. As such, the key factors of eligibility are based on what the business does to receive its income, the character of its ownership and where the business operates.

SBA generally does not specify what businesses are eligible. Rather, the agency outlines what businesses are not eligible.  However, there are some universally applicable requirements. To be eligible for assistance, businesses must:

Ineligible Businesses

A business must be engaged in an activity SBA determines as acceptable for financial assistance from a federal provider. The following list of businesses types are not eligible for assistance because of the activities they conduct:

There are also eligibility factors for financial assistance based on the activities of the owners and the historical operation of the business. As such, the business cannot have been:

Special Considerations

Special considerations apply to some types of businesses and individuals, which include:

Use of 7(a) Loan Proceeds

If you are awarded a 7(a) loan, you can use the loan proceeds to help finance a large variety of business purposes. However, there are a few restrictions. For example, proceeds can’t be used to buy an asset to hold for its potential increased value or to reimburse an owner for the money they previously put into their business.

Basic uses for 7(a) loan proceeds include:

SBA loans cannot be used for these purposes:

7(a) Loan Amounts, Fees & Interest Rates

The specific terms of SBA loans are negotiated between a borrower and an SBA-approved lender. In general, the following provisions apply to all SBA 7(a) loans.

Loan Amounts

Fees

Interest Rates

Percentage of Guarantee

7(a) Loan Application Checklist

Once you have decided to apply for a loan guaranteed by the SBA, you will need to collect the appropriate documents for your application. The SBA does not provide direct loans. The process starts with your local lender, working within SBA guidelines.

Use the checklist below to ensure you have everything the lender will ask for to complete your application. Once your loan package is complete, your lender will submit it to the SBA. 

  1. SBA Loan Application – To begin the process, you will need to complete an SBA loan application form. Access the most current form here: Borrower Information Form - SBA Form 1919
  2. Personal Background and Financial Statement – To assess your eligibility, the SBA also requires you complete the following forms: 
  1. Business Financial Statements – To support your application and demonstrate your ability to repay the loan, prepare and include the following financial statements:
  1. Ownership and Affiliations – Include a list of names and addresses of any subsidiaries and affiliates, including concerns in which you hold a controlling interest and other concerns that may be affiliated by stock ownership, franchise, proposed merger or otherwise with you.
  2. Business Certificate/License – Your original business license or certificate of doing business.   If your business is a corporation, stamp your corporate seal on the SBA loan application form.
  3. Loan Application History – Include records of any loans you may have applied for in the past.
  4. Income Tax Returns – Include signed personal and business federal income tax returns of your business’ principals for previous three years.
  5. Résumés – Include personal résumés for each principal.
  6. Business Overview and History – Provide a brief history of the business and its challenges. Include an explanation of why the SBA loan is needed and how it will help the business.
  7. Business Lease – Include a copy of your business lease, or note from your landlord, giving terms of proposed lease.
  8. If You are Purchasing an Existing Business – The following information is needed for purchasing an existing business:

 

Questions? Contact Madera Financial Today to discuss your SBA loan needs

(520)241-0969

 

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