Smarter SBA 504 Financing
For particular scenarios, our SBA 504 loan product is very competitive and one of the best in the marketplace for dental, veterinary, medical, optometry, ophthalmology, pharmacy, and healthcare practices. Major, positive changes to the program are now in effect due to the Small Business Jobs Act (Bill 5297). For example, refinancing with the SBA 504 program is now allowed; in prior years, it was only applicable for purchases. The new maximum loan amount is now $12 million, and this includes both the first and second lien position loans. Primary benefits include: a low down payment of 10%, amortization periods as long as 25 years, and some of the lowest fixed interest rates in the business.
The 504 is essentially two loans. The first lien position loan is funded by a conventional bank, and the second lien position note is funded by the CDC (Certified Development Corporation) or SBA loan. The CDC segment is fixed and amortized over 25 years, with fixed periods ranging from 3, 5, 10, and 25 years. The conventional bank loan covers 50% percent loan to value (LTV), while the CDC loan covers 40% LTV. The borrower contributes the remaining 10% via the down payment.
Another interesting benefit of the SBA 504 pertains to how the down payment is calculated compared to conventional loans. The down payment is factored off the “total project cost,” meaning fees such as closing, 3rd party and renovation costs can be rolled into the loan. In addition, the 10% down payment is factored off the total amount. This is called the “total project cost.” As a comparison, most conventional bank loans have the down payment calculated off of the purchase price, with all other fees and costs added to the down payment. This substantially increases the amount of capital borrowers have to contribute. This is a very important point to remember, since most conventional loan products do not have this ability to include fees, equipment, construction costs, etc. in the loan amount.
The USMF Smarter SBA 504 Loan helps Dentists, Veterinarians, Physicians, Optometrists, Ophthalmologists, Dermatologists, Pharmacists, Urgent Care facilities and Ambulatory Surgery Centers purchase commercial real estate, keeps more cash in the practice, and offers long-term fixed rates with the lowest down payments in the business.
Benefits & Program Highlights
- Available in all 50 states
- Minimum credit score preferred at 650 (and lower with reasonable explanation)
- Loan amounts up to $12 million
- Low down payments start at 10%
- 24-hour pre-approval
- Practice must occupy 51% or more of the property
- All property types allowed
Terms of First Mortgage (Conventional Bank Loan)
- 50% LTV
- 25 years, fully amortized, fixed term
- Fixed, floating and adjustable rates are available
- Competitive fee structure
- Prepayment penalty applies & is set based on various factors
Terms of Second Mortgage (CDC/SBA Loan)
- 40% LTV
- 20 years, fully amortized, fixed term
- Fixed-rate is determined at SBA-guaranteed 504 Debenture sale
- Fee set by CDC
- Prepayment penalty for initial 10 years, none after the end of year 10
With our extensive experience and resources, USMF is the only financing source in the healthcare industry that guarantees a smarter financing solution. No other bank or lender offers this commitment. Consider USMF your trusted personal financing consultant.