BOLLARDCommercial Capital

01Two loans, one closing

SBA 504 — buy the building with ten percent down

The programme that exists specifically so an operating business can own its premises without draining its working capital. A conventional bank first mortgage covers half the project, a CDC debenture behind it covers most of the rest, and the business puts in ten percent.

Submit a scenario SBA 504 stack and blended cost

The capital stack

  • Owner equity10%
  • CDC / SBA debenture40%
  • Bank first mortgage50%
01

Terms

What this programme actually looks like

Typical equity
10% — 15% for a special-purpose building or a business under two years old, 20% when both apply
Debenture cap
$5,000,000 · $5,500,000 for qualifying manufacturers and energy projects
Debenture term
10, 20 or 25 years, fully amortising, fixed at the debenture sale
Occupancy test
Occupy at least 51% of an existing building; 60% on new construction
Eligible costs
Land, building, construction, long-life equipment, and eligible soft costs
Realistic timeline
60 to 90 days from a complete file, split between the bank and the CDC

Illustrative only. Bollard is a fictional business built as a website demonstration — the figures below are worked examples, not an offer, a quote or a rate sheet.

02

Fit

When it is right, and when it is not

A lender that only publishes the first list is selling. Both lists below are the same length in real life.

The right instrument when

  • You are buying the building your company already rents, or one you will move into.
  • The equipment inside is expensive and long-lived, so it can ride in the same project.
  • You would rather keep cash in the business than push twenty-five percent into a down payment.
  • A twenty-five year fixed second behind a bank first is worth more to you than a shorter, cheaper note.

The wrong instrument when

  • You are buying a building to lease out. 504 is for businesses that occupy their own space — an investor deal belongs in the conventional or bridge column.
  • You need to close in three weeks. Two lenders and a debenture sale do not compress that far; bridge to 504 exists for exactly this.
  • The premises are a small part of a much larger working-capital need. 7(a) handles a blended request more gracefully.
03

Underwriting

What gets looked at, in what order

  1. 01

    The business, first

    A 504 is underwritten on the operating company. Two or three years of tax returns and interim statements, a debt schedule, and a global cash-flow view that includes the guarantors.

  2. 02

    The building, second

    An appraisal, an environmental screen sized to the property type, and a construction budget if there is work to do. Special-purpose buildings carry more equity because they resell into a thinner market.

  3. 03

    Occupancy, checked

    The 51% test is a real test, not a formality. If part of the building stays leased to a third party, the plan for that space belongs in the file at the start.

04

Worked example

Worked example — 24,000 sq ft flex building

Purchase price
$2,400,000
Improvements and soft costs
$260,000
Total project
$2,660,000
Bank first mortgage (50%)
$1,330,000
CDC debenture (40%)
$1,064,000
Owner equity (10%)
$266,000

Figures are a worked example, not a quote. Run your own numbers on the 504 stack calculator.

SBA 504 stack and blended costRun it with your own figuresLease versus ownRun it with your own figures

Common property types

05

Questions

What people ask about this programme

Who actually holds each loan?

A conventional lender holds the first mortgage. A Certified Development Company holds the second, funded by a debenture the SBA guarantees and the capital markets buy. You make two payments.

Can the ten percent come from anywhere?

It has to be documented, and a lender will trace it. Seller financing on standby, and equity already sitting in land you own, both come up regularly and both need to be raised early rather than late.

What happens if we outgrow the building?

You sell it, refinance it, or lease the part you no longer use — subject to the occupancy rule that applied to the loan. That conversation is easier before the offer than after.

Every question, in one place

Deal intake

Ask about sba 504

Describe the building and the business, and a desk would come back with the structures worth pricing.

This is a demonstration site. Forms validate and confirm on screen; nothing is transmitted, emailed or stored.

Next bay

Tell us about the building

A twenty-minute conversation is usually enough to know whether a deal works, which programme fits, and what your equity actually supports.

Submit a deal scenario Work the numbers first

Or call the desk

(816) 555-0142

Monday to Friday, 8am – 6pm Central

A demonstration number in the range reserved for fiction. It does not ring anywhere.