Benefits to the Business Owner:
The SBA 504 Loan Program provides an opportunity for business owners to purchase commercial real estate and long-term equipment at reasonable rates and terms.
- 10% Down Payment
Small business owners receive up to 90% financing, allowing them to conserve valuable working capital. Start-up businesses and special purpose properties require additional down payment.
- Low, Fixed Interest Rates
Businesses will not have to worry about their rate going up during the 504 Loan, because it is a fixed rate.
- Longer Term of Repayment Means Lower Payments
A 10 or 20 year repayment terms results in even payments. The bank’s loan is in first lien position and is typically amortized over a longer term.
- Ownership Equity in Real Property
Property owners can avoid the risk of ongoing lease payment increases along with possible tax advantages.
- Collateral is Limited
With the 504 Loan, the only collateral is the commercial property or equipment that is financed by the loan, leaving other business and personal assets free of liens.
Benefits to the Lender and Broker:
The SBA 504 Loan Program provides an opportunity to strengthen the relationship with the business client.
- Strong Collateral Position
The bank is in first lien position with 50% loan-to-value, reducing its exposure and credit risk. Bank’s lower loan amount can also help when approaching legal lending limits.
- Unlimited Project Size
The 504 loan can be used for gap financing on a conventional loan when a business owner doesn’t want to sink valuable business cash in fixed assets.
- Fast Approval
Our staff will work with the borrower and banker from start to finish enabling most loans to close within 45 days.
- Prequalification of Your Clients
We can prequalify applicants, saving everyone time in determining which properties might be most appropriate.
WITH THE 504, EVERYONE WINS!
- Business owners keep more working capital in the business due to the favorable loan terms, down payment, and interest rate.
- Sellers get funds faster because of SBA’s faster approval time.
- Brokers earn commissions quickly and close loans that might not have qualified for conventional financing.
- Banks get a 50% LTV first lien on the building, typically resulting in a lower interest rate to the borrower.
- Neighborhoods benefit from increased economic development and additional jobs.
- Taxpayers are not affected as no tax dollars are used to fund the 504 Loan Program.