Loan Structure

Lone Star is licensed by the Small Business Administration to make SBA 504 loans, which are designed to help small businesses buy, construct or renovate commercial and industrial buildings as well as buy and install heavy machinery and equipment. Lone Star partners with private banks and lenders to provide up to 90% financing to businesses.

A Typical SBA 504 Loan Structure Has Three Participants


A bank, credit union, or other non-bank lender makes a commercial loan, typically 50% of total project costs, which is secured by a first mortgage.

Lone Star

Lone Star makes a SBA-guaranteed loan of up to 40% of project costs, plus SBA loan fees, and is secured by a second mortgage. The total loan amount depends on the type of business and project up to a maximum of $5 million ($5.5 million for manufacturing businesses).


Borrower pays 10% of project costs using cash, equity in the land or building, and/or prepaid project-related expenses. Equity of 15-20% is required for start-up businesses and purchase of single-use properties such as hotels.

* Lone Star Participation is reduced and borrower’s contribution is increased if the project is a ‘start-up’ business or a ‘special purpose’ business. If either of these classifications exists, the Lone Star SBA 504 Loan is reduced to a 35% participation. If both exist, the Lone Star Loan participation is reduced to 30%.

Effective Interest rate as of

AUGUST 6.53%