How are payments made on the SBA 504 loan?
Payments on the SBA 504 loan are made by Automatic Clearing House (ACH) debit to the borrowers designated checking account on the first of each month after the loan closes. They are made in monthly installment. Payments on the 504 loan are separate from your payments on the 50% first mortgage loan. Ongoing fees decrease every 5 years. There is a prepayment penalty for the first half of the loan term on the SBA 504 loan. In startup situations or single-purpose buildings being financed, an equity injection of 15% is required. The Certified Lender (CDC) is a permanent lender only. This means the 50% first mortgage lender will have to bridge the Certified Lender’s 504 loan portion until the project is complete. The Certified Lender will sell its bond and fund its loan when the Certificate of Occupancy is issued. Interest and fees on the bridge loan can be included in the project costs to be financed and the Certified Lender can make the bridge loan exempt from NYS mortgage tax.
