The SBA requires that the permanent term loan provided by the bank in participation with a 504 debenture, must fulfill the following conditions:
Interest Rate
- Must be fair and reasonable.
Loan Terms
- A minimum of 10 years if requesting a 20 or 25 year term 504 loan or if the project involves real estate
- A minimum of 7 years if requesting a 10 year term 504 loan
- The bank's note and lien instruments must not allow future advance clauses except advances for the reasonable costs of collection, maintenance, and protection of the bank's lien(s).
- The Bank's senior loan cannot be cross-collateralized with other financing provided by the bank.