Can the Borrower’s contribution be borrowed?
Although it is preferred that the borrower’s contribution be in cash or equity, a portion of the contribution can be borrowed as long as: 1) the lien position is subordinate to the 504 loan, 2) the borrower cannot pay the loan for the equity contribution at a faster rate than the 504 loan, and 3) the borrower must demonstrate repayment ability for the borrowed funds.
