Frequently Asked Questions

General FAQ | SBA 504 FAQ | SBA 7(a) FAQ | SBA 504 Refi FAQ

General FAQ

All of our current monthly interest rates and how they are calculated can be found in our Lender Portal, which you can access by creating an account here.

Sign into the Lender Portal and click the button “Submit a Loan”. If you do not have an account, click “Login” on the menu bar in the upper right hand corner then simply enter your information. You can also watch the how-to video here.

For applicants who don’t meet eligibility requirements for our SBA programs, you can refer them to our sister organization, B:Side Fund.

There are two different processes for partnering with us, depending on whether it is an SBA 504 or 7(a) loan. There is no formal agreement that you or your bank would need to sign in order to partner with us on a SBA 504 loan. For SBA 7(a) financing, you will need to sign our Lender Service Provider (LSP) agreement.

Both SBA programs have their advantages including longer repayment terms and lower down payments. The SBA 504 loan program has a split financing structure between a Certified Development Company (like B:Side Capital), a lending institution, and the borrower. The SBA 7(a) loan program is a loan funded directly from a bank that has an SBA guarantee. It can also finance a variety of business purposes, unlike the SBA 504 program, which is primarily for commercial real estate and capital equipment.

A small business applicant (either alone or combined with any affiliate businesses) cannot exceed $5 million average net income (over the last two years) or $15 million net worth.

Initial eligibility requirements include:

• Business is for-profit and located in the United States

• Business is valued at less than $15 million and the business has an after tax profit of less than $5 million a year over the average of two years

• Owner will occupy 51% or more of commercial real estate that is being renovated or purchased

• Owner will occupy 60% or more of commercial real estate that is being built

• Individuals/entities that own 20% or more of the company are willing to act as personal guarantors

• Business has a demonstrated need for credit

We’re here to help assist you through the process. Sign into our lender portal for more information and to schedule a meeting with one of our loan officers.

SBA 504 FAQ

A Certified Development Company (CDC) is a non-profit organization certified by the Small Business Administration to help finance SBA 504 loans in partnership with lending institutions.

The typical structure of an SBA 504 loan is financed in part by the bank (up to 50% of the total loan), in part by B:Side Capital on behalf of SBA (up to 40% of the total loan) and in part by the business owner (10%, 15% or 20% depending on the type of business and if it is a startup).

Please reach out to us to discuss current timelines and contract dates.

Yes! There is no prepayment penalty if the SBA 504 loan is paid off anytime in the second half of the loan’s term. The prepayment penalty in the first half of the loan’s term depends on the debenture rate and declines by 10% annually, calculated at six-month intervals.

Minor furniture and fixtures, professional fees (such as appraisal costs and environmental reports), closing costs, interim loan fees, interim loan interest, and construction contingency can be included in the loan.

Yes, the SBA 504 can be used for debt refinancing if they meet the following criteria: 

• Commercial real estate loans to be refinanced must have been in place for a minimum of 6 months (existing SBA notes for commercial real estate are not eligible)

• 90% loan-to-value is allowed and SBA authorization expires after nine months

• Cash out can only be used for business operations incurred within 18 months and cannot be more than 20% of the total project with a loan-to-value of 85%. Renovations cannot be funded with the cash out, however repairs are eligible.

• Debt refinance with business expansion may be eligible if the expansion costs exceed refinance costs by 1:1

SBA 504 loans allow eligible businesses to buy, build, or renovate owner-occupied commercial real estate and/or purchase machinery or equipment. This may include financing land and energy upgrades.

SBA 7(a) FAQ

Small Business Administration 7(a) loans provide general business financing from $25,000 to $5 million and are offered by banks. Many banks do not have the resources to have an in-house SBA 7(a) expert, and that’s where we come in. B:Side Capital  helps banks navigate the loan process in order to provide greater access to this program. As your Lender Service Provider (LSP) we act as a trusted extension of your team to offer this attractive SBA guaranteed program.  

Get in touch with us and we will send you the Loan Services and Indemnification Agreements to sign. These agreements are then submitted to the SBA for review and approval. Once approved, we can start assisting you with your SBA 7(a) loans. The process only needs to be completed once in order to start working with us.

The SBA 7(a) loan program can finance a variety of business purposes including debt refinance, working capital, tenant improvements, inventory and equipment, along with business acquisition, expansion, and startup costs. It can also be used to purchase commercial real estate (although rates under the SBA 504 program are typically better for the business owner).

For loans with a maturity of 15 years or longer, prepayment penalties apply when:

• The borrower pays 25% or more of the outstanding balance.

• The prepayment is made within the first three years after the date after receiving funds. (5% fee within first year of disbursement, 3% within second year, and 1% fee within third year).

For loans of $150,000 or less, SBA guarantees up to 85%. For loans over $150,000, SBA guarantees up to 75%. However, under the SBA 7(a) Express, Export Express, Export Working Capital, and International Trade loans, SBA can guarantee between 50% to 90%.

SBA 504 Refi FAQ

The SBA 504 Refinance Loan program is an opportunity for small businesses owners to refinance their existing commercial real estate loan with an SBA 504 Refi loan, which functions under the same terms as a typical SBA 504 loan program; however interest rates are generally higher.

Business owners may be eligible to refinance their existing commercial real estate loan from a conventional lender (excludes borrowers with an existing SBA loan) as long as their business occupies 51% or more of the property. In some cases, cash-out for eligible business operating expenses is allowed. Repairs may also be eligible. Please contact us to discuss the project and all SBA eligibility requirements.

• Renovations and capital expenditures cannot be funded with the cash-out option; however, repairs are eligible.

• If a borrower decides to refinance using the cash-out option, they are able to tap into their commercial real estate equity that can finance ordinary business expenses, such as payroll, professional fees, utilities, inventory, etc.

• This program offers low, long-term, fixed interest rates up to 25 years.

They must have been in operation for the last two years and must provide a 12 month payment history.

• The LTV requirement for most SBA 504 Refinance projects is a maximum of 90%.

• If it is a special purpose property, the LTV requirement would be 85%.

• If this is a second SBA loan for a special purpose property, the LTV requirement would likely be 80%.

• If the project involves cash-out, the maximum LTV is 85%.

A borrower can receive cash out for business operating expenses. The required LTV is 85% and the cash out must not exceed 20% of the appraised property value.

An appraisal dated within 12 months of the SBA application is required.

• A copy of the existing promissory note

• Transcript payments for 12 months

• Documentation that shows 85% or more of the promissory note was used for 504 eligible costs

• Security documentation such as recorded Deed of Trust and UCCs

• Appraisal

A borrower must notify B:Side Capital with any change of ownership for the life of the loan. Any change in ownership within the first 12 months of funding, SBA approval is required.

Collateral on the SBA 504 Refinance program must match what was taken in the promissory note to be refinanced.

The equity within the commercial real estate property will serve as a down payment for the loan. Additional cash would be needed only if the existing equity did not meet the 85%-90% LTV requirement.