SBA 504 Loan Program

About the Program and Use of Funds
The SBA 504 Loan Program is a partnership program between a Certified Development Company (CDC), and a lender offering 90% financing to small businesses. California Lending Partners, which is a CDC, can provide your small business a 504 loan to:

• Purchase, renovate or construct commercial real estate property
• Make energy efficiency improvements, reducing energy use by at least 10%
• Generate renewable energy or renewable fuels
• Purchase equipment with a useful life greater than 10 years

Typical 504 Deal Structure
The typical structure of a 504 loan is for a bank to provide a first mortgage of 50%, a certified development company, such as California Lending Partners, to provide 40% of the loan and for the business owners to make a 10% down payment.

Max Loan Amounts
SBA 504 loans can finance up to $5 million or up to $5.5 million for manufacturers or when loan proceeds are used for energy efficiency upgrades or the installation of renewable energy. There is no limit on the amount a bank can lend in conjunction with the 504 loan provided by the CDC and therefore no maximum project size.

Interest Rates and Terms on 504 Loans
The interest rate for July 2011 is 5.58%. 504 loans for real estate are 20-year fixed-rate loans. SBA-guaranteed pools of 504 loans are funded on a monthly basis, so a new 20-year fixed rate is established for all 504 loans each month. It is the SBA guaranty that enables these loans to be funded at below-market rates. For the first mortgage, banks offer fixed or adjustable rates.

Business Size
The business net worth must be less than $15 million. After-tax income must be $5 million or less, on average, for the prior two years.

Owner Occupancy
The business must occupy 51% of an existing building purchased and 60% of a newly constructed facility.

Benefits of 504
• Low down payment - as little as 10% cash injection required. This enables the business to retain working capital for continued growth and expansion. Single-purpose facilities or start-up businesses require a slightly higher down payment.
• Long term, below market, fixed rates - SBA 504 loans are fixed for 20 years, fully amortized.
• No additional collateral required for most projects.

Learn more about how the 504 loan can be used to finance energy efficiency and greening.

California Lending Partners is ready to help your business take advantage of long-term fixed rate SBA 504 financing!

To apply for a 504 loan or for more information, contact:

Michel Ottolia
Vice President/Business Development Officer
Tel: 415 252-7370
Cell: 510 910-1151
Fax: 415 553-4434
michel@californialendingpartners.com

California Lending Partners is a certified development company affiliated with Urban Solutions.