Third Party Lender Loan Terms
Third Party Lender permanent first position loan terms and rates (including points and fees as applicable) are set by the Third Party Lender with a few simple limitations:
- The minimum term of the permanent loan is 10 years when the CIC 504 Loan is 20 years (typically real estate projects).
- The minimum term of the permanent loan is 7 years when the CIC 504 Loan is 10 years (typically machinery and equipment projects).
- Cross collateralization of the CIC 504 common collateral is not permitted without prior consent (at application time).
- Cross default provisions and covenant defaults such as DSCR requirements will not be enforceable while the CIC 504 Loan is in place.
- SBA charges the Third Party Lender 0.5% on the permanent loan as a participation fee.
- The Third Party Lender should consider the participation fee when pricing the permanent loan. The fee is payable at the CIC 504 closing.
- CIC 504 Loans fund once a month.
- CIC issues a bond (debenture) for each 504 Loan it closes.
- SBA packages the bond together with bonds issued by other 504 lenders around the country and sells them on Wall Street as government backed securities.
- Proceeds from the sale are wired directly to the Third Party Lender to retire the interim debt on the designated funding date.
- The CIC 504 Loan closing must occur at least two (2) weeks prior to the District Counsel Cut-Off Date published in the SBA Funding Schedule to ensure the loan is included in the intended month's funding.
View the SBA Funding Schedule.
CIC is an economic development lender contributing financial expertise and practical guidance to small business entrepreneurs in Connecticut and Rhode Island who have powerful ideas and need more power to grow them.