Community Business Finance's 504 Loan Program is specifically designed for purchasing property or equipment with a low fixed interest rate and as little as 10% down. However, the SBA classifies some properties as a "special purpose property," which requires a 15% down payment on 504 loans. Borrowers planning to buy a special purpose property should be prepared for this additional expense.
The SBA defines a special purpose property as "a property that is appropriate for one use or limited use: a building that cannot be converted to another use without a large capital investment."
According to their SOP, the SBA considers only the following as a limited or special purpose property:
Be careful not to make the mistake of assuming your property is on this list. Sometimes conventional lenders will consider a facility to be special use when the SBA does not. For an example of this, read about our client that used a 504 loan to open a gun range.
If you have any questions about special purpose properties or Community Business Finance's 504 Loan Program contact our offices
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.