FAQ’s

Why use Montana Community Finance Corporation (MCFC)?

MCFC has been making SBA 504 loans for over 30 years! It takes time and effort on the part of the lender and the small business to work through the process. MCFC has the experience to guide you and with our expedited application and closing status, we have a quicker turnaround time with the SBA.

Is there a lot of paperwork?

There is some paperwork but in the end, the business’s documentation will be in good order and they will have the benefit of a low down payment, fixed interest rate, and long term financing.

The reason is a variety of certifications must be made in the process by MCFC, the participating lender and the business owner. These certifications can only be supported by having the appropriate and accurate documents in hand. You can’t certify to something you haven’t seen! Also, the investors who make this loan program happen are relying on the SBA, who in turn relies on MCFC, to ensure we have complete and accurate documentation. We make every effort in order to streamline the process where ever possible.

How much space does the business have to occupy?

The business must occupy 51% of an existing building and 60% of a newly constructed building moving into an additional 20% within 10 years.

Can my down payment (borrower contribution) be borrowed?

Yes, although it is preferred that the borrower’s contribution be in cash or equity of project property. The borrower’s contribution can be borrowed as long as: 1) the lien position is subordinate to the 504 loan, 2) the borrowed contribution is not repaid at a faster rate than the 504 loan, and 3) the borrower can demonstrate repayment ability for the borrowed funds.

Is my franchise eligible for SBA 504 financing?

Possibly. A review of acceptable franchises is listed on the Franchise Registry at www.franchiseregistry.com. If your franchise is not listed, SBA can review your franchise agreement, license agreement, membership agreement, co-op agreement, dealer agreement, jobber or similar agreement to determine if your franchise qualifies for the SBA 504 program. Contact MCFC to start the review process.

Will I need to personally guarantee the SBA loan?

SBA requires guarantees from all individuals and legal entities  holding  a 20% or more ownership interest in either the Borrower or the Operating Company. In some instances, other guarantors may be needed.

Can I lock in the rate today and how is the rate calculated?

You cannot lock your rate prior to funding. The rate is set on the Tuesday the week prior to the monthly funding and fixed for the term of the loan. The rate is based on a spread over U.S. Treasury rates. The spread is determined by current market factors.

Are 504 loans assumable?

Yes, SBA 504 loans are assumable, upon qualification. A small assumption fee may be required, but the prepayment premium does not apply in this instance.

Can I prepay my SBA 504 loan early?

Yes, you can prepay your SBA 504 loan in full, but we cannot accept partial prepayments. If you prepay during the first half of your loan term, there is a declining prepayment premium included in your payoff. We will need at least 30 days notice of your intent to prepay since your loan is sold on the secondary market. Contact our office for further information on your prepayment.