A 504 project typically includes 3 elements: a loan (or 1st mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a 2nd mortgage secured with a junior lien from a Certified Development Company (backed by a 100% SBA-guaranteed debenture) covering up to 40% of the cost, and a contribution of at least 10% equity from the small business borrower.
Under the new program, portions of the senior liens are sold to investors in the secondary market. For pool eligibility, the 1st mortgage must be associated with a 504 loan disbursed on or after February 17, 2009. The program will be in place
