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Your Guide to the SBA 504 Loan Application Process

Your Guide to the SBA 504 Loan Application Process

When small business clients contact you about owner-occupied commercial real estate deals, the SBA 504 loan program can be an excellent financing tool. With lower down payments, fixed interest rates and longer terms, the program offers benefits that are appealing to business owners and bankers alike.

Many of our partners and clients have questions about the 504 application process before they get started. Here, we map out the process so that all parties involved know what’s required.

When does the 504 process happen? 

The 504 process happens simultaneously with the first mortgage process, making the timeline to approval about the same. In fact, it’s not uncommon for 504 loans to be approved prior to the first mortgage! This means that the time to close is usually about the same for projects that include a 504 component versus those that do not. And, as you’ll read below, many of the documents required for 504 are required for the first mortgage, meaning the borrower frequently isn’t burdened with significant additional paperwork, which further streamlines the process.

Step 1: An initial meeting to discuss the deal

Who: The 504 Company, the partner bank and the client

When a client approaches you with an owner-occupied commercial property to purchase, rehab or refinance, the first step is to reach out to schedule a meeting between a loan officer from The 504 Company, yourself (or a representative from the partner bank) and your client. Together, we’ll discuss your client’s project and business, review the benefits and requirements of the 504 program in detail and develop loan scenarios to help all parties understand the borrower’s options. 

Step 2: Application and document collection

Who: The 504 Company, the partner bank and the client

If the borrower is a good fit for 504 and they decide to pursue an application, the next step in the process is completing the application and submitting required documentation. Here’s a brief overview of roles and responsibilities at this part of the process:

The 504 Company and the partner bank will work together to determine the list of required documents for the application. The 504 loan application package is very similar to the one required for the first mortgage on the property. To make the process easier and more streamlined, many of the required documents can be shared between the bank and The 504 Company (with your client’s permission, of course!).

The partner bank and the client will work together to collect all required documents and information. Applications can be completed electronically or on paper and, when convenient for your client, they can also be partially completed through The 504 Company’s online portal. Your loan officer from The 504 Company is there to assist you and your client in document collection.

There are essentially three categories of documents required for most 504 loans:

1. General application items:

These include relevant loan applications from the bank, the SBA and The 504 Company and typically include basics such as a description of the business, corporate documents and fundamental information for each personal guarantor.

2. Key cost documents:

These include copies of contracts of sales (initial drafts to get loan processes underway and executed documents for loan approvals) and substantiated third-party quotes or estimates for renovations, equipment, furniture, fixtures and similar items.

3. Financial documents:

Potential borrowers must provide three years of tax returns for each guarantor and corporate business entity; interim financial statements including profit and loss, balance sheets and accounts receivable/accounts payable aging reports; and two years of profit-and-loss projections.

Additional items may be requested depending on the project. We can provide a more complete list at or following the initial meeting with you and your client, so you know what’s required before you get started.

Step 3: Underwriting submission and approval

Who: The 504 Company

Once loan application packages are received, our team begins the underwriting submission and approval processes. Our underwriters will often have additional questions, and we’ll need partner banks and clients to respond to follow-up emails or calls in a timely manner to keep the process moving along. Follow-up information can typically be provided via email or telephone conversations between borrowers and, when necessary, their CPAs.

Contact The 504 Company whenever a potential 504 loan project is presented

As soon as your clients approach you with projects that may be a good fit for the 504 loan program, please contact The 504 Company. It’s both our responsibility and our pleasure to make this process easier and more effective for you and your clients and we look forward to serving you.

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