Passive investment companies, non-profits, lending institutions, real estate development companies, and some other enterprises are not eligible for 504 loans. The project would preferably also fulfill other economic development goals including leveraging private investment in distressed areas, areas engaged in a revitalization program, minority enterprise development, rural development, export expansion, and other federal public policy goals. Inc. Board of Directors and the private lender Board of Directors for approval. Package is completed and sent to SBA for approval. SBA sends a loan authorization which outlines the loan terms and conditions as well as documents needed for closing.
Private lender provides the construction or interim financing.
Project completed and loans closed. Once the loans are closed, a debenture in the amount of the SBA 504 loan and fees is sold, and the lender is repayed the interim SBA 504 amount financed. The borrower makes payments to the private lender on the lender's loan, and the private lender services its loan. Inc. otherwise services the SBA 504 loan.