504 loans are designed to finance durable equipment and owner-occupied real estate. Bankers Trust will help you navigate all the details.
With the goal of promoting economic development, a 504 loan provides small businesses with long-term, fixed-rate financing for the acquisition of major fixed assets.
Bankers Trust partners with a certified development company (CDC), a specialized SBA-certified nonprofit corporation, to finance small businesses looking to expand. Each partner makes its own loan to you. Typically, the Bankers Trust loan is secured by a first lien covering 50 percent of a project’s cost. The CDC’s loan is secured by a second lien for up to 40 percent of the project’s cost and as the borrower, you must contribute equity of at least 10 percent of the project’s cost.
The SBA does not set a limit on a project’s size or a total loan amount that Bankers Trust and the CDC can jointly finance under this program. However, the SBA does limit a CDC’s financing participation to 40 percent of the total project cost, or a maximum of $5 million for most businesses and $5.5 million for manufacturers.
The requested funds must be used for fixed assets, such as the purchase of land and buildings, site and building improvements, newly constructed facilities, and long-term machinery and equipment. Real estate financed by a 504 loan must be at least 51 percent owner-occupied for existing buildings, and 60 percent for new construction.
Both Bankers Trust and the CDC will underwrite your request independently. The bank may contact the CDC during the underwriting period to discuss any concerns and vice versa. While the terms and conditions on the bank and CDC loans may differ, our priority is to jointly create a structure that meets your specific needs.
To be eligible, your business must operate as a for-profit entity, have a net worth of less than $15 million, and an average net income of less than $5 million for the last two years. 504 loans cannot be made to a business engaged in real estate speculation or rental investments.