Posts tagged CDC
What is the Required Debt Service Coverage Ratio (DSCR) for SBA 504 Loans?

In order get approved for an SBA 504 loan, you must prove your company’s ability to repay it. A business plan and the necessary financial documents play a role in that. However, most underwriters will use a debt service coverage ratio, or DSCR, as a major element in their decision-making process.

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How Is the SBA 504 Loan Structured?

It’s important to realize the difference between a 504 loan and many other types of loans. For instance, with a home loan, your funds go specifically towards the purchase of the house and land on which it sits. It may also be used to pay some associated costs, and there are loan options that will allow you to finance needed repairs and renovations into the project, too. In contrast, 504 loans are structured differently— and, in this article, we’ll discuss how.

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What Is a Certified Development Company and Why Are They Involved in 504 Loans?

According to the SBA, “A Certified Development Company (CDC) is a nonprofit organization that promotes economic development within its community through 504 loans. CDCs are certified and regulated by the SBA, and work with SBA and participating lenders (typically banks) to provide financing to small businesses, which in turn accomplishes the goal of community economic development.”

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