Bridge or Interim Loan
A loan made to an authorized SBA 504 borrower typically for the entire amount of the project less the borrowers personal investment. This loan covers all costs including land and building acquisition, equipment purchase, and as appropriate, construction activities. This loan is repaid at the time of SBA 504 funding with up to 40% of the loan covered by the SBA 504 funds and the balance by the primary lenders first mortgage secured loan.
Certified Development Company
Certified Development Companies are local public/private partnerships organized as non-profit community based corporations that provide SBA 504 financing to local small companies. They are “Certified” by the Small Business Administration to offer SBA 504 loans to eligible small businesses. They market, package, process, close and service SBA 504 loans as well as offer other economic development programs in their areas of operation. Preferred Lending Partners is the Certified Development Company for Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties of Colorado.
It is a personal written acknowledgement and commitment by the borrowers who own 20% or more of the company that they will honor the terms of the note even if the business fails.
Principals & Owners
Owners must be US citizens or registered aliens with green card. Owners cannot be convicted felons currently on probation. Anyone who owns 20% or more of the operating company must personally guarantee (unsecured general guarantee). Liquid assets of the principals are taken into account in determining eligibility. Significant liquid assets owned by a principal could disqualify the loan because the project could be financed by the principal without SBA 504 assistance.
Small Business Administration (SBA)
The U.S. Small Business Administration, established in 1953, provides financial, technical and management assistance to help Americans start, run, and grow their businesses. SBA is the nation’s largest single financial backer of small businesses. Last year, the SBA offered management and technical assistance to more than one million small business owners. The SBA also plays a major role in the government’s disaster relief efforts by making low-interest recovery loans to both homeowners and businesses.
America’s 25 million small businesses employ more than 50 percent of the private work force, generate more than half of the nation’s gross domestic product, and are the principal source of new jobs in the U.S. economy. Visit SBA Website
Permissible Debt Refinancing Under the 504 Program with Expansion
Here are some of the eligibility criteria for the Debt Refinancing portion of the SBA 504 loan program.
- Total debt refinanced is no more than 50% of new expansion costs
- The proceeds of the indebtedness were used to acquire land, including a building situated thereon, to construct a building thereon, or to purchase equipment
- The existing indebtedness is collateralized by fixed assets
- The existing indebtedness was incurred for the benefit of the small business concern
Project proceeds will be used only for refinancing existing indebtedness or costs relating to the project financed
- The financing will provide a substantial benefit to the borrower when prepayment penalties, financing fees and other financing costs are accounted for
- The borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing
For more details for Debt Refinancing within the SBA 504 loan program please contact the Preferred Lending Partners office.
While deployed in the military, our service men and women engaged in many duties and experiences which translate into valuable skills as business entrepreneurs. As an acknowledgement to their service to our country, we are offering the VetLoan Advantage Program which offers assistance to these business owners. Please speak with one of our business development officers for more details.