The first mortgage must be equal to or greater than the 504 loan. The 504 loan may not exceed 40% of the total project cost. The borrower’s injection must be at least 10% of the total project cost (or 15% to 20% if a start-up and/or special purpose facility). No more than 50% of the project costs can come from federal sources.
If the loan is for a special purpose building, the bank’s loan percentage will never be lower than 50% because any increase in the down payment must reduce the SBA loan and not the bank’s loan. (For example, on the special purpose building purchase the borrower puts 15% down, SBA loan then is 35% of the project, and the bank loan is 50%)