SBA 504 Loan Conventional Commercial Real Estate Loan
Loan Amount Up to 90% financing of the total project cost (inclusive of land, construction/renovations, soft costs, and closing costs). Commonly, 75% to 80% of the appraised value or purchase price, whichever is less.
Equity 10% of the total project cost. 20 to 25% plus closing and soft costs.
Term 1st Mortgage: 20 or 25 years.

2nd Mortgage: 20 years, fixed.

Usually 23 years blended. No balloons, only rate resets.

 10 to 20 year terms. Often has variable rates.
Amortization 1st Mortgage: 20 or 25 years.

2nd Mortgage: 20 years.

Usually 23 years blended, fully amortizing.

 15 or 20 years.
Pricing 1st Mortgage: Competitive fixed or variable rates.

2nd Mortgage: Usually 0.5 to 0.75% below competitive rates and fixed for 20 years.* This is the least expensive financing available to most small business owners for commercial real estate.

Both loans are assumable.

*The blended, effective rate of our 1st and 2nd mortgages is nearly always lower than conventional financing and is fixed for a longer period of time.

 Competitive fixed or variable rates.

Usually not assumable.
Personal Guarantees Has them, but for strong credits, can be limited to pro rata ownership. Frequently has them.
Prepayment Penalty 1st Mortgage: 5-year or 10-year options, with the ability to pay up to 20% of principal annually without penalty.

2nd Mortgage: 10-year declining, but because this is the least expensive financing, it makes better sense to prepay the 1st mortage with any excess cash.

 Sometimes has them, but frequently not.
Debt Service Coverage (DSC) At least 1.0x frequently without maintenance. Usually 1.2x or higher with maintenance.
Fees Usually 1.5% of 1st mortgage and 1% of 2nd mortgage. Blends to 1.27%, but is negotiable with strong credit scores. Usually 1.0% of loan amount.
Personal Credit Scores Usually no less than 600. Usually no less than 650.