mortgage loans arizona

For those who aren't familiar, the SBA has a loan program known as the "504" program which assists small business owners in purchasing commercial real estate.  Here's how it works in a nutshell:

 

-         A conventional lender funds in 50% of the project.  This debt is not guaranteed by the SBA.  In theory, the lender has little chance of losing money on the loan unless the property value falls by 50% or more. (Note: this is happening more than you think, especially in areas like CA and FL where the real estate market has been hit hard).

-         A local Community Development Corporation (CDC) funds 40% of the project.  This loan is 100% guaranteed by the SBA.

-         The borrower puts in 10% of the project cost.

In the current downturn, I get many calls from distressed borrowers who acquired their commercial property via the SBA 504 program.  Often times, they are quite concerned with being able to afford their two monthly loan payments (one to the conventional lender, one to the CDC), knowing that failure to make their monthly payments can lead to a slew of problems, including foreclosure.

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