504 Bridge Loan Program Provides Interim Phase Second Mortgage Financing for Commercial Lending Partners.
Under the Small Business Administration (SBA) 504 Loan Program, commercial lenders partner with a certified development company (Florida First Capital) to provide small business owners with
up to 90% financing for the purchase of owner-occupied commercial real estate and/or fixed machinery and equipment.
Typically, a 504 loan is structured whereby a commercial lending partner finances 50% of the project and holds the first mortgage. Florida First Capital/SBA finances 40% of the deal and holds
the second mortgage. The borrower provides a 10% down payment.
One of the most critical stages for a commercial lending partner in an SBA 504 loan project is the interim phase between the commercial lending partner’s closing and the permanent
takeout of the second mortgage by the SBA, during which time the commercial lending partner is at risk on the second mortgage.