504 Loan for Real Estate after using 7a for initial aquisition

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March 30, 2023

by a searcher from University of Texas at Austin in Houston, TX, USA

What are the limitations for using a 504 loan to purchase owner-occupied real estate for a business that already has a 7a loan? If the business has multiple partners, but not all of them want to be a part of the real estate transaction, can you still use a 504 loan with sister entity under a different ownership make-up than the business?

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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
Yes you can. The real estate holding company doesn’t have to mirror the operating company per ownership.

Nuances though.

The operating company still has to guaranty the real estate debt 504 because you’re getting this SBA 504 loan for the benefit of the operating company. And the cash flows from the company are what is being relied on for repayment. SBA doesn’t provide investor debt.
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Reply by a searcher
from University of Pennsylvania in New York, NY, USA
Blake - Did you ever end up executing on this? I would be curious to learn how it worked out.
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