PG on SBA 504 loan for real estate

by a searcher from University of Pennsylvania - The Wharton School

4 years ago

With all the great SBA resources here I am seeking to understand the following:

1) in a standard 50/40/10 SBA 504 real estate acquisition, what does the PG cover.....what amount?
2) in the same case and given the loan is fully collateralized by the real estate, when does the PG go away?

3) As an owner (<20%) in a business, can i separately use a SBA 504 to buy real estate and sign a 25 year lease with the business? or does the real estate need to be part of the same family as the business and with the same ownership %?

Thank you!

0 likes
113 views
2 comments

professional from Georgia Institute of Technology

email me at --@----.com with your 504 Loan need

4 years ago | like reply | 0 likes

lender from University of Missouri - Columbia

A required PG would be on the 40%. The 50% is a conventional bank loan so that is up to the individual bank. Same on question #2. Banks can require or waive a PG based on their individual requirements, On the 3rd question, the bank (and the SAB affiliated group that funds the 40% loan) would likely require the guarantee of the operating company. As such the 40% loan would likely require a PG on all owners of the op co with >20% if the 504 is involved.

4 years ago | like reply | 1 like

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Investor seeking Self-Funded Search Deals

Downsides of "buying a job" below 750k+ EBITDA?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

6-7x for a Self-funded Search Deal?

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.