Community Business Finance is committed to helping businesses achieve their dreams with our 504 Loan Program. We provide businesses with financing for major fixed assets such as office buildings, retail buildings, warehouse facilities, heavy equipment, and commercial vessels. Projects are typically financed with two loans: a first lien loan through a commercial lender for 50% of the project cost and a second lien loan for 30% - 40% of the project cost, financed by Community Business Finance. The borrower provides a 10% - 20% down payment.
The 504 Loan Program is a take-out financing program. Community Business Finance offers an up-front commitment to finance a project, and the participating commercial lender provides interim financing, advancing up to 90% of the total project funds during the construction/acquisition period.
Some banks are not comfortable with 90% loan to value during this interim period. While it is true that the risk goes up during this time, for projects with no construction phase, the bridge period is usually 45-60 days. This is a small window of increased risk. Obviously with new construction or renovations, this period is much longer and ends when the project is completed.
However, it is possible for lenders to avoid this risk increase. Another lender can provide a bridge loan for an additional fee. The bridge loan "bridges" the gap between initial closing and project completion, when the CDC funds the take-out portion of the total project cost. Using a bridge loan allows the first lien holder to keep their loan to value ratio at 50%.
Some lenders cannot provide interim financing because the amount will exceed their legal lending limits. Lending limits are the maximum dollar amount that a single bank can lend to a given borrower. By using an alternative lender to provide the bridge financing, the original lender can still participate in the 504 Loan Program without exceeding their lending limit.
Community Business Finance values its relationship with lenders. We believe in working with your lender to offer the best loan terms for your business.
Get started by filling out a short form on our website, or contact our offices directly to discover how partnering with Community Business Finance will help you realize your business dreams.
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at email@example.com.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017 or email her at firstname.lastname@example.org.