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SBA Form 1504 Development Company 504 Debenture
What Is SBA Form 1504?
SBA Form 1504, Development Company 504 Debenture is a form used to report about the debenture payment schedule of development companies. The form needs to be submitted only by the companies participating in the Small Business Administration (SBA) 504 loan program. The company using the SBA 1504 has to agree to the debenture rules provided by the Bank of New York, while also maintaining the schedule and the amount of payments.
The latest version of the form was released by the SBA on June 1, 2018 , with all previous editions obsolete. An up-to-date SBA Form 1504 fillable version is available for download below.
The form is used with the SBA 504 loan programs. An SBA 504 loan is commercial real estate financing for owner-occupied properties. These loans require only a 10 percent down payment by the small business owner and the amount of loan may range from $125,000 to $20 million. Funds from 504 loans program can be used to buy land, machinery, or facilities.
Certified Development Companies - or CDCs - are managing the SBA 504 loans. A Certified Development Company is a community-based company certified by the Small Business Administration and made to promote economic growth within its sphere of operations. A CDC is required to complete an SBA Form 1504 for each debenture to be sold in order to fund a 504 loan program participant.
SBA 504 Debenture
An individual who is participating in the SBA 504 loans program has some debentures. A debenture is a type of loan issued by a company and backed only by general credit rather than any specific assets.
Private investors - such as pension funds, insurance companies, and large banks - buy loans from the CDC in a monthly sale of the SBA 504 loan debt. That debt is the debenture. The investors receive interest on the debt semi-annually, which comes from the interest paid on loans. The size of the interest investors receive is the debenture rate.
All business owners participating in the SBA 504 loans program will find out the exact interest rate on loan only after it has been funded - after the sale of the debenture.
SBA Form 2286, 504 Debenture Closing Checklist is a form related to the SBA Form 1504 filed by all CDCs and the SBA during all 504 debenture closings. The form is a checklist of the documents that SBA will need to determine whether a debenture can be sold to fund the loan.
Download SBA Form 1504 Development Company 504 Debenture
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