SBA 504 Loan at First Hawaiian Bank

The SBA 504 Loan program at First Hawaiian Bank is designed for small and growing businesses that need long-term, fixed-rate financing to acquire commercial real estate, purchase major equipment, or finance large-scale improvements. Combining the strength of a local lender with federally supported small business development financing, this product helps business owners preserve working capital, expand operations, and invest in assets that support long-term growth.

Purpose and Uses

SBA 504 loans are intended for tangible fixed assets that increase a company’s capacity or competitiveness. Common uses include:

• Purchase of owner-occupied commercial real estate, including land and buildings.
• Construction of new facilities or renovation and modernization of existing properties.
• Acquisition of long-term heavy machinery or manufacturing equipment.
• Site improvements, utility installations, and other permanent improvements tied to operations.

Structure and Benefits

The SBA 504 model pairs a senior loan from First Hawaiian Bank with a long-term, SBA-backed secondary loan administered through a Certified Development Company (CDC). This structure offers several advantages:

• Lower down payment requirements compared to conventional financing, helping preserve working capital.
• Long-term, fixed-rate financing for the SBA-backed portion, which enhances predictability of payments and helps with long-range planning.
• Competitive interest rates and terms that can be more favorable than many commercial loan alternatives for owner-occupied properties and qualifying equipment purchases.
• Ability to finance a large portion of project costs, including soft costs and fees, depending on project specifics and eligibility.

Eligibility Overview

Eligibility for an SBA 504 loan typically includes business characteristics and project criteria. While each application is reviewed individually, common eligibility considerations are:

• Small business status according to SBA size standards relevant to the borrower’s industry.
• For-profit business operations with sound management and the ability to support debt service.
• Primary use of proceeds for fixed asset acquisition or improvement that will benefit the business long-term.
• Owner-occupancy requirements for real estate projects—priority is given to borrowers who will occupy and operate in the financed space.

Application Process

Applying for an SBA 504 loan at First Hawaiian Bank involves several coordinated steps between the borrower, the Bank, and a CDC. The general process usually includes:

1. Initial consultation to discuss project scope, financing needs, and eligibility guidelines.
2. Preliminary assessment and collection of financial statements, business plan highlights, and project estimates.
3. Loan structuring with a senior bank loan and coordination with a CDC for the SBA-backed portion.
4. Formal underwriting, documentation review, and submission of the SBA package through the CDC.
5. Condition clearing, closing, and funding once approvals are obtained.

Documentation and Requirements

Applicants should be prepared to provide comprehensive documentation to support underwriting. Typical requirements include:

• Business financial statements (historical and interim) and tax returns.
• Personal financial statements and tax returns for principals and guarantors.
• Project budget, construction contracts or equipment invoices, and appraisals if applicable.
• Business plan or executive summary outlining the purpose of proceeds and expected impact on operations.
• Current leases, organizational documents, and any required licenses or permits.

Repayment Terms and Fees

SBA 504 financing typically combines a conventional bank loan for a portion of the project with a long-term, SBA-backed second mortgage through a CDC. Repayment terms for the SBA-backed portion are generally long-term and fixed, offering a stable principal and interest schedule. Fees can include closing costs, loan packaging costs, and CDC or SBA guaranty fees, which vary based on the project size and structure. First Hawaiian Bank will provide a clear breakdown of projected fees and repayment schedules during the loan review phase.

Why Choose This Option

Small business owners select SBA 504 financing for several strategic reasons:

• It preserves working capital and lines of credit by reducing upfront cash requirements.
• It locks in long-term, fixed rates for a significant portion of the financing, aiding budgeting and cash flow management.
• It supports asset-based growth—purchasing real estate or equipment that can appreciate or improve operational capacity.
• It can be combined with traditional senior debt to provide a comprehensive financing solution tailored to project needs.

Considerations and Limitations

SBA 504 loans are powerful but best suited for certain types of projects and borrowers. Considerations include:

• Owner-occupancy and project eligibility rules that may restrict purely investment-oriented acquisitions.
• Potential requirements for personal or business collateral and personal guarantees depending on credit profile.
• Rigorous documentation and underwriting timelines compared to some conventional loans.

Next Steps

If you are planning a major investment in commercial real estate or equipment and want structured, long-term financing, an SBA 504 loan from First Hawaiian Bank may fit your needs. Begin with an initial discussion to evaluate eligibility, outline your project, and understand potential loan structures. With thoughtful planning and the right documentation, SBA 504 financing can be a cornerstone of your long-term growth strategy.

For a personalized assessment, prepare your project summary and recent financials so our lending team can help you explore the best path forward.

Address Bank: First Hawaiian Center Honolulu, Hawaii, US, USA
Bank: First Hawaiian Bank
Headquarters: Honolulu
Products: Loans & Credit
Type: SBA 504 Loan