Why choose an SBA Loan?
The Small Business Administration can provide funding to communities to promote economic development in local communities. With the confidence of long-term and fixed rates, small businesses can confidently invest in expansion and innovation.
Many successful companies have taken out SBA loans in order to secure better financing conditions. The Small Business Administration (SBA) provided early funding and other resources to many companies that are now household names, including Under Amour, Chipotle, and Apple.
Why choose an SBA 504?
The SBA 504 Program finances real estate and equipment at a fixed, below-market interest rate to create and retain jobs. Traditional financing often requires 20% down payments, making it difficult for businesses. For qualifying businesses, the 504 Program can finance 90% (504 loan plus third-party lender loan) of a project cost, preserving cash flow over a longer repayment term.
The SBA 504 Program finances real estate and equipment at a fixed, below-market interest rate to create and retain jobs. Traditional financing often requires 20% down payments, making it difficult for businesses. For qualifying businesses, the 504 Program can finance 90% (504 loan plus third-party lender loan) of a project cost, preserving cash flow over a longer repayment term.
Benefits of an SBA Loan
The 504 Loan Program provides long-term, fixed-rate financing for major fixed assets to promote business growth and job creation.
Hidden
You can start an Application Online.
Low Down Payment
Financing of up to 90% of project costs, allowing small businesses to maintain working capital. In addition, when compared to 7(a) and other SBA loans, 504 loan fees remain the lowest on the market.
Long-Term Financing with Fixed Rates
Fully amortized loan terms of up to 25 years are available, and the interest rate remains fixed through the loan’s term. SBA 504 loans are funded through monthly bond (debentures) sales to Wall Street investors, which results in more competitive interest rates.
Government Backed
The SBA 504 Loan Program helps small businesses buy property to boost local economies. A business owner can buy real estate or machinery and lock in occupancy costs for 25 years while getting tax benefits and adding value.
Own your Business Property
Owning your building is a better investment than paying rent. You can write off depreciation and other eligible expenses to help lower your tax liability.
Project Eligibility
Most small businesses under $15 million can get a 504 real estate or equipment loan. Up to $5,500,000 in 504 financed projects.
Equity Injection
- If a property has been owned for at least two years, the equity could be used
- New businesses require a minimum 15% down
- Businesses purchasing a special use property require a minimum 15% down
- New businesses purchasing a special use property require a minimum of 20% down
Who can Qualify?
- Profitable businesses located in the United States
- Business under $20 million tangible net worth and $6.5 million profit after taxes, including affiliates
- Businesses must occupy at least 51% of the existing property or 60% of a newly built property
- All 20% owners must personally guarantee
Ineligible Use of Funds
- Working Capital
- Inventory
- Business Acquisitions
Requirements
The 504 Loan Program offers up to 90% financing for a Purchase of a commercial Building or Refinance. The following are required:
- Existing Land & Building – Borrower must occupy at least 51%
- Land and Construction of Building – Borrower must occupy at least 60% of the building
- Construction of building on Ground Lease
- New or used equipment with a remaining 10-year life expectancy