5 Most Commonly Asked Questions by Borrowers

We realize that all lending can be complicated, especially the SBA 504 loan program.

We also recognize that as potential borrower, you know your business, and we know the 504 program.  Here are the top 5 questions we hear from borrowers as they start navigating the SBA 504 loan program:

  1. What will my down payment be? The short answer is anywhere from 10%-20% of total project costs.  There are two factors to determining your interest rate – Are you a New Business?  Are you a Special Purpose Property?  IF your answer to these questions is NO then your down payment should be 10%.  IF your answer is yes to one of these questions, your down payment will be 15%.  IF your answer to both questions is yes then your down payment will be 20%.  We can provide you with a structure sheet which outlines your project with use of funds, as well as source of funds.
  2. How long will it take to get an SBA approval? Once we have a complete underwriting package it will take approximately 30 days to obtain an SBA approval.  This time frame includes underwriting, internal loan committee/board approval and packaging the SBA submission documents.  We will clearly outline a timeline specific to your project at the time of application.
  3. Can PLP help me find a bank partner?  PLP has great industry knowledge and can connect you to an appropriate party who can assist in finding you your first mortgage lender. We can work with any bank or private party to provide a financing package for your project.  While PLP is not a loan broker, we have a pulse on what banks are interested in financing so we can try to put you in touch with banks that will fit the needs of your business and your project.  We often suggest starting with the bank that your business banks with.
  4. What will the terms of my loan be?  We have three options for the term/amortization of your SBA loan.  10 year, 20 year and 25 year.  Typically, 10 year loans are for equipment only.  Projects involving real estate have the option of 20 or 25 year term and amortization.  Your interest rate will not be determined until your SBA loan funds.  Throughout the application, underwriting and closing process, we can provide you with the most recent interest rate, as well as the interest rate trend for SBA 504 loans.  This will give you the best idea possible of what your interest and monthly payment will be.  The SBA 504 loan does not have a balloon payment.  There is a prepayment penalty during the first half of your loan term.  If using a 10 year term, the penalty is for the first 5 years.  If 20 or 25 years, the penalty is for the first 10 years.  Please do not hesitate to call with questions.
  5. What else do you need from me? Hopefully the answer is nothing.  At the time of application, you will receive a very comprehensive underwriting needs list, unless your bank has provided us with an underwriting package up front.  We work with the bank as much as possible to share documents and make sure each of us have a complete package.  During underwriting, our Chief of Credit will reach out to you to introduce herself and talk through any questions that she might have to complete her underwrite.  We strive to work as efficiently as possible so that you can do what you do best and that is run your business.

Leave a Reply

Your email address will not be published. Required fields are marked *