Financing Montana Business
Big Sky Finance is a statewide certified development company licensed by the SBA to administer the SBA 504 Loan program in Montana. The SBA 504 Loan program is designed to provide long-term, below-market, fixed asset financing to small, for-profit businesses. The SBA 504 Loan program represents permanent financing and is an economic development program utilizing job creation.
We are here to partner with commercial lenders to provide the best long-term financing tool available to Small Business owners for their real estate and/or equipment financing needs. Leave the SBA paperwork to us – working together, we will make the process simple for you, so you are able to stay focused on serving your customers!
Let us partner with you on financing
About the SBA 504 Loan Program
Big Sky Finance is here to partner with our lenders in order to provide the best long-term financing tool available to Small Business owners for their real estate and/or equipment financing needs. Leave the SBA paperwork to us – working together, we will make the process simple for you, so you are able to stay focused on serving your customers!
Big Sky Finance is a statewide certified development company licensed by the SBA to administer the SBA 504 Loan program in Montana. The SBA 504 Loan program is a direct SBA lending program designed to provide long-term, below-market, fixed asset financing to small, for-profit businesses. The SBA 504 Loan program represents permanent financing and is an economic development program utilizing job creation.
- Purchase land and improvements (operating company must occupy 60% of new buildings and 51% of existing buildings.)
- Construction of new facilities, or modernizing, renovating, or converting existing facilities.
- Refinancing of existing debt in some circumstances.
- Machinery and equipment with a minimum useful life of 10 years.
- Soft costs including but not limited to, title searches, appraisals, environment reports, architect fees, interim loan interest, certain bank fees, furniture and fixtures
- Working capital
Small Business Defined As
Tangible Net worth of not more than $15 million and 2-Year average Net Income after taxes less than $5 million.
Economic Development Requirements
- Job creation or retention (one job per every $75,000 borrowed from SBA 504), OR
- Public policy or community development goals met (various options available).
- Manufacturing firm (one job per every $120,000 borrowed from SBA 504)
Rates and Terms
- SBA rate fixed for the term of the loan (20-year rate is tied to the 10-year Treasury bond rate).
- The private lender sets their own rates and fees (commercially reasonable).
- Loan terms are 10, 20, or 25 years (Real Estate: 10, 20, or 25 year note, Equipment only: 10 year note).
Fees and Payments
- All SBA 504 loan fees are added to the loan amount and amortized over the loan term. One time processing fee of approx. 2.15% of SBA’s portions, loan closing fees of approx. $2500
- On-going service fee included in the effective full-term rate.
- Prepayment penalty for 1st half of term of SBA note—declining prepayment scale.
Example Of Financing On A Typical $1 Million Project
Total Project Cost:
|Acquisition of Land & Building||$800,000|
|Soft costs (appraisal, architect, engineering, closing costs)||$20,000|
|Entity||Loan Amount||% of Project||Security|
|CDC/SBA 504 Loan||$400,000||40%||2nd Lien|
|Borrower down payment*||$100,000||10%*|
* Start-up OR Special Purpose Building (i.e. car wash, hotel) requires 15% equity. Start-up AND Special Purpose Building requires 20% equity. Borrower down payment can be in the form of: cash, land equity, seller carry-back note (term must match SBA term and be subordinated to SBA if secured by project RE), or any combination thereof.
Typical Deal Structure For An Existing Business Would Be:
- 10% Owner Equity
- 50% Lender Financing (senior position on collateral)
- 40% SBA Financing (junior position on collateral)
Additional equity of 5% or 10% may be required—new business or special property.
BSF will provide a list of items needed to complete the loan application and analyze the loan request.
Once the 504 loan is approved by BSF’s loan committee and SBA, SBA will issue a written agreement that outlines the terms and conditions under which the 504 loan can be funded.
The lender provides a permanent loan and an interim loan for the business to acquire and/or improve the property while BSF works through the 504 closing process with the lender and business.
SBA 504 loan funding
The 504 loan will fund following the schedule set by SBA and will replace the lender’s interim loan when the project is complete or the equipment purchased.
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