SBA 504 Loan at MidFirst Bank

MidFirst Bank’s SBA 504 financing solution is designed to help small and growing businesses acquire long‑term, fixed‑rate capital for the purchase, construction, or renovation of major fixed assets. The SBA 504 program is a partnership between a private lender, a certified development company (CDC), and the U.S. Small Business Administration that combines a traditional first mortgage from a bank with a government‑backed second mortgage to reduce borrower down payment requirements and extend amortization for improved cash flow.

How the SBA 504 Program Works

The SBA 504 structure typically involves three partners: MidFirst Bank as the lead lender providing a conventional first mortgage, a Certified Development Company that issues a long‑term, fixed‑rate second mortgage backed by the SBA, and the borrower who contributes a modest equity injection. The combined structure allows borrowers to finance the purchase of owner‑occupied commercial real estate and heavy equipment with a lower down payment than many conventional loans, while locking in long amortization on the SBA‑backed portion.

Primary Uses

• Purchase of owner‑occupied commercial real estate (offices, warehouses, manufacturing facilities, retail properties).
• Construction of new facilities or substantial renovation and modernization of existing buildings.
• Acquisition of long‑term machinery and equipment integral to business operations.
• Financing eligible soft costs such as architectural, engineering, and appraisal fees associated with the project.

Key Benefits for Borrowers

• Low down payment: The combined financing structure can significantly reduce upfront capital requirements, helping preserve working capital.
• Long‑term, fixed rates: The SBA‑backed CDC portion typically offers long amortizations and fixed interest rates, easing long‑term budgeting and reducing interest rate risk.
• Large project financing: The program supports transactions involving major fixed assets that may be difficult to fund with conventional loans alone.
• Predictable payments: Extended amortization on the SBA portion creates lower monthly payments compared to shorter‑term commercial loans.
• Support for business growth: Proceeds may free resources for hiring, expansion of operations, and other growth initiatives.

Eligibility Overview

Eligibility for SBA 504 financing requires that the business meet SBA size standards, operate for profit, and be located in the United States. Projects generally must support job creation or meet public policy goals established by the SBA, though exceptions and alternative eligibility criteria may apply depending on the nature of the project and location. The property typically must be owner‑occupied; occupancy thresholds and specific requirements vary by project type and SBA rules.

Typical Loan Structure

While structures can vary, a common SBA 504 transaction pairs a conventional first mortgage from MidFirst Bank that finances approximately half of the project cost with a CDC/SBA‑backed second loan that covers a significant portion of the remaining cost. The borrower contributes an equity down payment, and in certain cases—such as start‑ups or special‑purpose properties—the required down payment may be higher. The CDC portion is often available with 10‑, 20‑, or 25‑year amortization terms depending on the project and SBA program rules.

Application Process and Timeline

1. Prequalification: Initial discussion with a MidFirst Bank lender to review project scope, financing needs, and preliminary eligibility.
2. Documentation: Submission of financial statements, tax returns, business plan, projections, and project cost estimates. Supporting documentation for the property and project scope is required.
3. Bank underwriting: MidFirst Bank completes its underwriting for the first lien portion while coordinating with a CDC to structure the SBA‑backed portion.
4. CDC and SBA submission: The CDC prepares documents for SBA approval; upon SBA authorization, the CDC arranges funding for the second lien.
5. Closing and funding: Coordinated loan closings allow both the bank and CDC portions to fund in accordance with the agreed disbursement schedule.

Documentation Typically Required

• Business financial statements and historic tax returns.
• Personal financial statements and personal tax returns for owners with significant ownership.
• Project cost breakdown, construction or renovation plans, and contractor bids.
• Projections demonstrating the business’s ability to service the debt.
• Property information, appraisals, and environmental assessments as required.

Common Considerations

Borrowers should be aware that program requirements are governed by SBA rules and CDC guidelines, which can affect eligibility, down payment requirements, and project approval. Costs such as CDC fees, SBA guarantee fees, and closing costs are part of the transaction and should be factored into the borrower’s budget. Timing for SBA review and CDC issuance varies by project complexity and local CDC processing capacity.

Who Benefits Most

The SBA 504 product is particularly well suited for established small businesses that need to acquire or improve long‑lived assets and want to preserve working capital through lower down payments and predictable long‑term payments. It is attractive to businesses planning to expand facilities, invest in energy‑efficient upgrades, or modernize production equipment.

Why Choose MidFirst Bank

MidFirst Bank combines local underwriting expertise with the SBA 504 program’s advantages to deliver tailored solutions for commercial real estate and fixed asset financing. Working with an experienced lender helps streamline coordination with certified development companies and manage the documentation and closing process, giving borrowers a clear path to funding their strategic investments.

Next Steps

If your business is evaluating a capital project that involves acquisition, construction, or long‑term equipment purchase, consider a conversation with a MidFirst Bank lending professional to explore whether SBA 504 financing fits your needs. Early discussions can help identify program eligibility, potential structure, and the documentation required to move the project forward.

Address Bank: Oklahoma City, Oklahoma, United States
Bank: MidFirst Bank
Headquarters: Oklahoma City
Products: Loans & Credit
Type: SBA 504 Loan