What are the primary advantages of using the SBA 504 Program for major fixed asset acquisition and/or expansion projects?

• Up to 90% project financing is provided.
• Lower borrower down payment – usually only 10% is required.
• 20-year fixed interest rate; interest rate is substantially below market.
• Fast loan approval

What is the typical financing structure on projects featuring SBA 504 financing?

• 50 % is funded by a commercial bank.
• 40% is funded by Cascade Capital through the SBA 504.
• 10% is required as down payment (equity) by the borrower.
• 100% Total Project Costs

Are there any circumstances where the requirement for a borrower down payment exceeds 10%?

There are two circumstances in which a business borrower needs to provide more than 10% equity. If a company has been in business less than two years or a company’s new operating facility has only a limited or “singular” business purpose usage (such as a car wash, movie theatre or motel). If either of these circumstances exist, the borrower must contribute 15% direct equity. If both of these circumstances exist simultaneously, the borrower must contribute 20% direct equity.

Are there circumstances in which a borrower may obtain SBA 504 funding in excess of $1.5 million?

Yes, if a borrower’s project meets one of the SBA’s seven public policy goals. (See following question.) The maximum is $2.0 million. Manufacturing companies within NAICS Sectors 31, 32, or 33 may obtain up to $4 million.

What are the SBA’s Seven Public Policy Goals?

• Rural development
• Expansion of minority, women or veteran-owned businesses
• Expansion of exports
• Business district revitalization
• Enhanced economic competition
• Restructuring due to federally mandated standards and/or policies
• Changes necessitated by federal budget cutbacks

Does the SBA 504 require any additional project security beyond the second mortgage or lien on project assets?

Anyone owning at least 20% of the project borrowing entity and/or operating company must personally guarantee the SBA 504.

What are maximum business size standards for SBA 504 participation?

A business borrower, combined with any affiliates, cannot have net worth in excess of $7 million and/or maximum average net profits exceeding $2.5 million over the past two fiscal years.

What are the job creation/retention standards?

A business borrower must create or retain one job per $50,000 of SBA 504 funds borrowed within a two-year period of SBA 504 loan closing. Public Policy projects do not apply. Manufacturing companies must create or retain one job per $100,000 of SBA 504 funds borrowed.

What is the usual timeframe for SBA 504 approval?

Upon receipt of a completed SBA 504 loan package, Cascade Capital expedites your approval in 2-3 weeks.

What happens after SBA 504 loan approval?

The borrower receives the Authorization for Debenture Guarantee (commitment letter) from the SBA office and interim/construction funding for 90% of the project amount is provided by the bank lending partner. Upon completion of the project, Cascade Capital Corporation is notified and SBA 504 loan closing begins.

How do I get started?

• Obtain Cascade Capital Corporation Application Package
• In addition, please provide the following:
• History and description of business
• Description of SBA 504 project & use of proceeds
• Historical financial statements (last three years)
• Current financial statements (within 60-90 days)
• Projections (two years’ Balance Sheet and Income Statement)
• One year monthly cash flow projections (for businesses < 2 years old)
• Financial statements of affiliates (if applicable)
• Resumes of company officers and key employees
• Personal financial statements of company principals owning at least 20%
• Cost estimates for project real estate or equipment
• Appraisal of project real estate
• Environmental review or Phase 1 Inspection Report
• Copy of existing or proposed lease
• Bank commitment letter
• Application deposit of $2,500 (refundable)