Confirm the exact condition
The CDC evaluates whether the business depends on a principal and whether the SBA-backed portion of the transaction is fully collateralized. The bank financing the other portion may have separate insurance conditions.
Understand the amount and term
For the SBA-backed 504 calculation, the relevant comparison uses the net debenture amount and applicable discounted collateral value. It does not automatically use the total project cost. Minimum policy terms can vary with the debenture term.
Keep both closing teams aligned
Get each party’s exact assignee information and documentation requirements before the policy is issued. This avoids conflicting assignment instructions late in the closing process.
See the complete borrower guide for more detail.