Go Green to Qualify for Additional SBA 504 Financing.
Small businesses looking to grow and expand their operations through the purchase of commercial real estate and “go green” can benefit the environment and their bottom line with up to 90% fixed interest rate financing under the SBA’s 504 Green Loan Program offered through Florida First Capital.
The Secret to Financing Multiple SBA 504 Projects
Business owners who qualify for SBA 504 financing may be eligible for multiple SBA 2nd mortgages of up to $5.5 million per 504 green friendly project. There is no limit on the number of SBA 504 green projects allowed to each borrower under the SBA’s Green Public Policy Goals, which means that business owners looking for additional 504 financing may be eligible even if they have committed or outstanding SBA loans.
Funds for this program are not limited by the SBA’s usual aggregate lending limit of $5 million per borrower, which means business owners that previously reached their SBA maximum have the ability to receive additional loans.
Additionally, there is no limit on the amount of the 1st mortgage of a 504 project and therefore no maximum project size. In many cases, qualified borrowers with projects exceeding $20 million can still obtain up to 90% financing.
Benefits of the 504 Green Loan Program
- Up to 90% financing at below-market, fixed interest rates – No future interest rate fluctuations.
- Up to $5.5 million on the SBA 2nd mortgage portion per project with no limit on overall project size.
- Finance multiple SBA 504 green loan projects.
- Total projects from $125,000 to $20 million+.
- 10- and 20-year amortization terms available.
- Associated fees and soft costs can be financed in the loan (architectural and engineering fees, appraisals, closing costs, etc.).
Eligible Use of 504 Green Loan Proceeds
The following green initiatives are eligible for up to $5.5 million per project of SBA 504 financing provided they reduce energy consumption by at least 10% or generate at least 10% renewable energy:
- Energy Reduction – Acquisition or construction of a replacement facility or retrofit of a currently occupied or leased existing facility with energy saving technologies. Examples include improved insulation, lighting, HVAC systems and energy efficient windows. (Notes: acquisition or construction of an additional facility is not eligible. Retrofit projects must have been occupied for at least 12 months.)
- Renewable Energy – Plant, equipment and process upgrades of renewable energy sources (solar, wind, turbine, thermal) used to run a facility or renewable fuel producers, including bio-diesel and ethanol producers.
NOTE – Sustainable Design (LEED) Certification qualifies as a general SBA Public Policy Goal only (up to $5 million aggregate limit per borrower) and does not meet the SBA’s Green Public Policy Goal of up to $5.5 million per project.
Owner Occupancy Requirements
- Existing Buildings – Business must occupy at least 51% of the project within one year of ownership.
- New Construction – Business must occupy at least 60% of project upon occupancy and 80% within 10 years.
- The borrower may form a real estate holding company that leases 100% to the operating business, which then subleases surplus space (up to 49%).
NOTE: 504 loan proceeds may not be used to finance working capital.