Go Green to Qualify for Additional SBA 504 Financing


For hotel owners who are looking to expand their day to day operations and grow their business by not only purchasing commercial real estate but going green too, they are able to do their part by controlling their carbon footprint. On top of such, they are able to benefit their bottom line reaching up to a huge 90% fixed interest rate financing coming under the SBA’s 504 Green Loan Program which is being offered through SBA Expert.

How You Can Finance Multiple SBA 504 Projects at Once

For hotel owners who have qualified for SBA 504 financing, there is a chance that they also reach the requirements for obtaining multiple SBA 2nd mortgages reaching up to $5.5 million for each of their 504 green-related projects. There are currently no limits on how many SBA 504 green projects each borrower is allowed to have under the SBA’s Green Public Policy Goals, meaning that any hotel owners who are looking for additions to their current 504 financing are possibly qualified, regardless of whether they currently have outstanding SBA loans.

When it comes to this particular program, funding is not limited by the SBA’s regular aggregate limit of up to $5 million for each borrower in question. This means that any hotel or business owners who have reached their SBA maximum in the past will still be able to receive additional funding.

On top of this, there are currently no limits in place on the amount of the original loan of a 504 project which provides no limits to the project’s size. It isn’t uncommon for qualified borrowers whose projects already exceed $20 million that they are still able to obtain up to a total of 90% in financing.

The Benefits of the 504 Green Loan Program

There are many perks which would benefit you when looking into the 504 Green Loan Program.

  • You can get up to 90% financing at a fixed interest rate without the risk of your interest rate fluctuating over the loans lifetime.

  • For your 2nd SBA mortgage, you are able to get up to $5.5 million per project. However, there is no limit on your total project sizes.

  • You are able to finance multiple projects using the 504 Green Loan project.

  • Your projects can total from as low as $125,000 to over $20 million.

  • There are both 10 and 20 year amortization terms available for you.

  • Any fees that accompany the loan can be financed within the loan.

  • You will be eligible to use 504 Green Loan Proceeds.

Green-Friendly Initiatives

The green-friendly initiatives that you can find below are eligible for SBA 504 financing of up to $5.5 million for each project. The only requirement for this is that they decrease the amount of energy that they consume by a minimum of 10% or if they manage to increase their renewable energy by a minimum of 10%. These initiatives consist of:

Energy Reduction – Either constructing or purchasing facilities which are suitably fitted with technology which has been adapted so that it is considered energy efficient. Some examples of this is the improvement of insulation, energy saving lighting, or windows which have been fitted to prevent heat loss and therefore cut down on the energy needed to produce heat. It’s important to note that if you were to construct or purchase an additional facility, you would not be seen as eligible. Any projects in question must have had occupation for a minimum of 12 months.

Renewable Energy – Equipment and process upgrades in order to suit renewable energy sources such as solar (e.g. solar, wind, turbine, and thermal) which can be used for the facility to run energy efficiently. The same applies to renewable fuel produces with the inclusion of bio-diesel and ethanol.

Note that the “Sustainable Design Certification” qualifies only as a general SBA Public Policy Goal (limiting the borrower at a $5 million aggregate) and does by no means reach the SBA Green Public Policy Goal allowing for that limit to be risen to $5.5 million per project.

Owner Occupancy Requirements

Existing Buildings – A business must have occupation of 51% of the project within the first year of the projects ownership.

New Construction of Buildings – Upon occupancy, the business must have occupied a minimum of 60% and within 10 years it must have occupied a minimum of 80%.

The borrower is able to produce a real estate holding company which leases 100% occupancy to their operating business, however there would be a surplus of space (of up to 49%).

It’s important to note that any 504 loans cannot be used in order to finance any working capital.

If you’re interested in learning more about the SBA 504 Green Loan Program, you should turn to our lending experts. We will work with you to efficiently obtain a loan that is best suited to your needs. Call SBA Expert today at 949-439-1423 so we can begin working on your hotel loan.

1. “For Lenders: Financing the 504 Way,” SBA, U.S. Small Business Administration, available at https://www.sba.gov/offices/district/mt/helena/resources/lenders-financing-504-way>↩

2. Lance Collins, “SBA 504 Loan Program: Using LEED To Qualify For Funding,” GlobeSt.com, March 12, 2014, available at http://www.globest.com/sites/globest/2014/03/12/sba-504-loan-program-using-leed-to-qualify-for-funding/?slreturn=20160501153512>↩

#Green504 #SBA504 #CommercialRealEstateLoans #Financinggreen

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