Frequently Asked Questions
What is a Certified Development Company (CDC)?
A CDC is the conduit that submits the loan to the SBA for approval and becomes the servicing agent for all approved loans. There are approximately 300 CDCs located throughout the country, each serves specific geographic regions generally defined by states.
What areas do you serve?
We service the entire state of Texas and can assist with projects in other states.
What is the maximum loan amount?
Typically, our maximum loan amount is 40% of the total project, up to a maximum of $5,000,000 or $5,500,000. The maximum can be up to $5,500,000 if the business is a manufacturer or achieves “Green” guidelines for energy reduction or reusable energy.
Can equipment be financed?
Yes. Equipment can be included in our total project cost, or large heavy equipment can be financed without real estate for a term of 10 years.
Can soft cost be financed?
Yes. Transaction costs such as appraisal and environmental reports, title policy, loan fees, construction monitoring, interim interest, and architect and engineering fees, are some of the soft costs that can be financed.
What cannot be financed?
We cannot finance working capital, inventory, goodwill, and ineligible closing costs.
What types of businesses are eligible?
The program is offered to a wide range of businesses in the retail, manufacturing, service, and hospitality industries. The business must be a ”for profit” enterprise with a tangible net worth not to exceed $15,000,000 and/or net profit after taxes of no more than $5,000,000 for the previous two years. Individuals who own more than 20% of the business cannot have liquidity more than the total eligible project amount.
How much space does the business have to occupy?
If you are purchasing a new building, you must occupy 51%. If you are building a new building, you must occupy 60% with intentions of increasing your occupancy up to 80% over a two year period. The remaining 20% may be leased out.
Is my company too big for an SBA 504 Loan?
More than 90% of all privately held companies are eligible for SBA 504 financing. Applicants must meet credit criteria for qualification, but chances are good that you will qualify.
How can I certify that my property is “Green” for a higher loan amount?
A 10% (or more) reduction of energy consumption on an existing building, or new construction using renewable energy, may qualify you for a loan amount up to $5,500,000. The energy savings must be documented by a third party source.
I am expanding my business. May I get an SBA loan to refinance my current property?
You can refinance existing debt related to fixed assets if you also borrow money to finance more real estate or equipment through an expansion project. The amount of debt being refinanced must be 50% or less of the total cost of expansion.
Are there other requirements for SBA loans?
If a public goal is not achieved, or your project is not certified as “Green,” you will need to hire one new employee for every $65,000 that we loan.
Can I borrower part of my down payment?
Yes. This must be disclosed and terms reviewed before approval.
Can my loan be assumed?
Yes. Your loan can be assumed if you choose to sell your building.
What fees are involved in your process?
We request a $2,000 application deposit which is applied towards your loan fee. Our loan fee is 1.5% of our loan amount. The bank fee is negotiated between you and the bank. Our fee, and the bank’s fee, can be financed into the project cost.
How long does the process take?
Once a complete package is provided and approved by the lender, we typically have your loan ready for submission to the SBA within five business days. The loan will be funded once all funds are disbursed on the construction loan, bridge loan, or single disbursement loan.
When does my loan with you fund?
We will partner with a bank to provide your financing. Our lending partner will fund a bridge loan for up to 40% of the project. Once your project is completed, we will then fund up to 40% and pay off your bridge loan, creating your permanent loan for 20 years with a 20 year amortization and fixed rate.
When is my rate determined?
Your loan rate is determined once your loan closes with us and has funded. The funding date is separate from the closing date.