SBA 504 Loan at First Citizens BancShares

The SBA 504 loan program offered through First Citizens BancShares is designed to help growing small businesses acquire long-term, fixed-rate financing for major fixed assets. Tailored for companies that need to purchase owner-occupied commercial real estate, construct new facilities, or acquire long-lived machinery and equipment, the 504 structure combines the strengths of local lending relationships with the benefit of favorable, community-oriented capital from certified development partners. This product description outlines how the program works, its advantages, typical uses, eligibility criteria, key terms, the application process, and the practical benefits for businesses considering expansion, modernization, or relocation.

How the SBA 504 Program Works with First Citizens BancShares

The 504 loan is a collaborative financing structure that generally includes three parties: a private-sector lender, a Certified Development Company (CDC), and the small business borrower. First Citizens BancShares typically acts as the conventional lender providing a first lien loan, while a CDC arranges a second lien debenture backed by the U.S. Small Business Administration. The borrower supplies a down payment and covers transaction fees and closing costs. This combination reduces the borrower’s upfront cash requirements while providing access to long-term, fixed-rate financing for substantial capital projects.

Primary Uses of Funds

• Purchase of owner-occupied commercial real estate, including land and buildings.
• Construction of new facilities or renovation/expansion of existing properties.
• Acquisition of heavy machinery and long-term equipment integral to business operations.
• Refinancing of debt in certain circumstances that promote job retention, modernization, or community development.

Key Benefits

• Long-term, fixed interest rates: The CDC portion typically provides fixed-rate financing with extended amortization, helping stabilize payments over decades.
• Lower down payment: The shared financing structure reduces the borrower’s initial cash outlay compared to conventional loans.
• Preservation of working capital: With more favorable terms on fixed assets, businesses can free up cash for operations, inventory, and growth initiatives.
• Competitive overall cost of capital: Combining a conventional bank loan with the CDC/SBA-backed tranche can yield attractive blended rates and structured payments.
• Community and economic development focus: The program supports projects that create or retain jobs and contribute to local economic vitality.

Typical Loan Structure and Terms

While exact terms vary based on transaction specifics, industry standards and common practice offer a general framework:

• First lien conventional loan from First Citizens BancShares: usually covers up to a significant portion of the total project cost, depending on credit and project details.
• CDC/SBA-backed second lien: provides a long-term, fixed-rate debenture for a substantial portion of project costs, often with amortizations of 10, 20, or 25 years.
• Borrower down payment: a percentage of the project cost which may be reduced for certain borrower profiles or projects supporting job creation or community development.
• Reasonable fees and closing costs: shared among participants and typically rolled into the overall project budget when possible.

Eligibility

To qualify for an SBA 504 loan through First Citizens BancShares, applicants generally must be a for-profit small business that meets SBA size standards, be engaged in or moving into an acceptable line of business, and intend to use the property for an owner-occupied commercial purpose. Specific eligibility criteria include:

• Business size within SBA definitions for the relevant industry.
• Owner-occupancy requirements for real estate projects (typically a minimum percentage of property must be occupied by the business).
• Demonstrated ability to repay the loan from business cash flow.
• Reasonable credit history and adequate collateral beyond the project assets in some cases.
• Commitment to creating or retaining jobs and contributing to economic development when applicable.

Application Process

1. Initial consultation with First Citizens BancShares to discuss project scope, financing needs, and eligibility.
2. Preliminary underwriting and documentation request, including business financial statements, projections, tax returns, and project details.
3. Coordination with a Certified Development Company to assemble the CDC/SBA portion and prepare SBA application materials.
4. Formal underwriting, approval, and commitment letters from both the conventional lender and the CDC/SBA.
5. Closing and funding, with clear documentation of loan terms, amortization schedules, and any covenants or reporting requirements.

Documentation and Preparation

A well-prepared application accelerates review and decision-making. Commonly requested documentation includes:

• Business financial statements and tax returns for previous years.
• Interim financials and cash flow projections reflecting the impact of the project.
• Personal financial statements and resumes for principal owners.
• Detailed project budget, use of funds, and construction or equipment quotes.
• Property information when real estate is involved, including appraisals, leases, and environmental assessments where applicable.

Why Choose First Citizens BancShares for an SBA 504 Loan

Partnering with a bank that understands the local market and has experience coordinating SBA-backed transactions can make complex projects more manageable. First Citizens BancShares offers a relationship-driven approach, capital markets knowledge, and the ability to coordinate with CDC partners to deliver structured financing that matches long-term business objectives. The bank’s role as a conventional lender provides flexible underwriting alongside the stability of the SBA-backed portion, giving business owners the predictability and affordability needed to invest confidently in growth.

Potential Considerations

• Processing time for SBA approvals can be longer than for conventional loans; planning and early engagement help mitigate timing risks.
• Owner-occupancy and job-creation expectations introduce performance-related requirements that borrowers should understand before closing.
• Collateral and covenants may vary based on the business profile and project risk, so careful review of term sheets is essential.

Conclusion

The SBA 504 loan option at First Citizens BancShares is a strategic financing tool for small businesses aiming to acquire commercial real estate, expand facilities, or purchase long-term equipment while preserving working capital and securing long-term fixed rates. By leveraging the combined strengths of private lending and CDC/SBA-backed capital, borrowers gain access to tailored financing solutions that support sustainable growth and local economic development. Thoughtful preparation, early engagement with the bank, and clear project planning can unlock the full benefits of the 504 program and position companies for successful expansion.

Address Bank: Raleigh, North Carolina, U.S.
Bank: First Citizens BancShares
Headquarters: Raleigh
Products: Loans & Credit
Type: SBA 504 Loan