§ 120.920Required participation by the Third Party Lender.
(a)Amount of Third Party Loans. A Project financing must include one or more Third Party Loans totaling at least as much as the 504 loan. However, the Third Party Loans must total at least 50 percent of the total cost of the Project if:
(1) The Borrower (or Operating Company, if the Borrower is an Eligible Passive Company) has operated for two years or less, or
(2) The Project is for the acquisition, construction, conversion or expansion of a limited or single purpose asset.
(b)Third Party Loan collateral. Third Party Loans usually are collateralized by a first lien on the Project property. The SBA cannot guarantee these loans.