SmartChoice® Commercial Loan Application: Download PDF

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Loan Structures

The SBA 504 loan (aka the SmartChoice┬« Commercial Loan) can be confusing at first glance because it’s structured differently than ordinary commercial loans. There’s a reason for that, and it’s very beneficial for small business owners. Watch the video below to see Chris explain everything, and select “Learn More” to see more structure details on this page.

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Chris Hurn, CEO & Cofounder of MCC, explains how our loans are structured.

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SBA 504 Project Costs (Example A):
Acquisition of Real Estate $800,000
Renovations $100,000
Machinery $50,000
Soft and Closing Costs $50,000
Total Project Cost $1,000,000
SBA 504 Project Costs (Example B):
Land $250,000
Construction $600,000
Soft Costs $125,000
Closing Costs $25,000
Total Project Cost $1,000,000
SBA 504 Loan Structure Example:
1st Mtg. (50%) $500,000
2nd Mtg. (40%) $400,000
Equity $100,000
Total Project Cost $1,000,000

50% of the Total Project Cost

Conventional Loan at Market Rates

  • Up to 25-year amortization.
  • No balloons, calls or covenants.
  • Option of fixed or variable interest rate.
  • Assumable loan.

40% of the Total Project Cost

Below Market, Fixed Rate Bond with an SBA Guarantee

  • 20 year amortization.
  • No balloons, calls or covenants.
  • Fixed interest rate at below market rate, fixed for the entire 20 Years.
  • Assumable loan.

10% Total Project Cost

Equity Injection/Down Payment

  • Cash.
  • Can use equity in land if already purchased.
  • Can use prepaid soft costs, like architectural or engineering fees.
  • Assumable loan.

*15% equity requirement on special use properties or start-up businesses; 20% for special use properties and start-up businesses.

The Bottom Line: The SBA 504 loan (aka the SmartChoice® Commercial Loan) preserves capital and maximizes cash flow for small business owners. It really is the smart choice for small business owners who want to own their commercial real estate.

Are you eligible for a 504 loan? Apply Today

What Lenders Don't Say How to Qualify