Check the S.O.P. Q&A

Q – Are there any restrictions on the participation (% of transaction) for first mortgage lenders, mandated in the 504 program?

A –Yes, in certain situations such as “start ups” and “special purpose facilities” the first mortgage lender must be at least 50% participation or greater, but not less than the CDC. Should the borrower’s equity injection increase, that would go toward reducing the CDC’s participation.

However, the typical structure for all other 504 transaction remains at:

10% Borrower/Business
40% Certified Development Company (CDC)
50% Bank/First Mortgage Lender

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