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Lender Responsibilities

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 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.