What is an SBA 504 Loan?

SBA 504 loans are a great financing option for small business owners looking to purchase or improve commercial real estate.

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What is an SBA 504 loan?

The Small Business Administration (SBA) 504 loan is a government-backed loan designed to help small businesses expand or improve their facilities. The SBA 504 loan can be used for the purchase of land, buildings, and equipment, as well as for the construction of new facilities or the renovation of existing ones.

The SBA 504 loan is a long-term, fixed-rate loan that is available through participating lenders. The terms of the loan are set by the SBA and may vary depending on the project being funded. The maximum loan amount is $5 million, with repayment terms of up to 25 years.

To be eligible for an SBA 504 loan, businesses must meet certain size requirements and use the funds for eligible purposes. For more information on eligibility requirements and how to apply for an SBA 504 loan, please visit the SBA website.

What are the benefits of an SBA 504 loan?

The main benefit of an SBA 504 loan is that it allows borrowers to finance a large portion of their project with a long-term, fixed-rate loan, while only requiring a 10% down payment. 504 loans are also available for owner-occupied commercial real estate, which includes mixed use properties.

Other benefits of 504 loans include:
-Long repayment terms (up to 25 years)
-Fixed interest rates
-Ability to refinance an existing loan to take advantage of lower interest rates

How can I get an SBA 504 loan?

The 504 program provides financing for the purchase of fixed assets, which can include land, buildings, machinery, and equipment, with a life of 10 years or greater. The maximum loan amount is $5 million for standard 504 projects and $5.5 million for manufacturing projects.

To be eligible for a 504 loan, your business must:
-Operate in the United States or its possessions
-Be organized for profit
-Have reasonably invested equity
-Use the financing to create or retain jobs

What are the eligibility requirements for an SBA 504 loan?

To qualify for an SBA 504 loan, businesses must meet the following standards:
-Be for-profit and owner-operated
– engaging in business activities that are considered legal
-Have a tangible net worth less than $15 million and an average net income after taxes for the previous two years that is less than $5 million
-Operate primarily in the U.S. or its territories

In addition, the business seeking financing must also demonstrate a need for the loan. The project being financed must also create or preserve jobs and have a positive impact on the local economy.

How much can I borrow with an SBA 504 loan?

An SBA 504 loan is a loan that is backed by the Small Business Administration (SBA) and is used to finance the purchase of fixed assets, such as real estate or equipment. SBA 504 loans are available to small businesses that meet certain criteria, such as being owner-occupied and having a net worth of less than $15 million and after-tax profits of less than $5 million. The maximum loan amount that can be borrowed with an SBA 504 loan is $5 million.

What are the repayment terms for an SBA 504 loan?

The repayment terms for an SBA 504 loan are usually 10 years for real estate and 20 years for equipment, but can be up to 25 years in some cases. The loan can be fully amortizing, meaning that the loan is paid off over the term of the loan, or it can be partially amortizing with a balloon payment at the end of the loan term.

What are the fees associated with an SBA 504 loan?

The fees associated with an SBA 504 loan depend on the lender, but they typically range from 2% to 4% of the loan amount. These fees are paid by the borrower at closing and are in addition to any other closing costs that may be required.

How do I apply for an SBA 504 loan?

You can begin the process by contacting a Certified Development Company (CDC). The CDC is a nonprofit corporation that works with the SBA to provide financing to small businesses. The CDC will work with you to determine if you qualify for an SBA 504 loan and, if so, will help you through the application process.

What are the documents required to apply for an SBA 504 loan?

To apply for an SBA 504 loan, you will need to present:
-A business plan
-Personal financial statements
-Tax returns
-Collateral documentation

How long does it take to get an SBA 504 loan?

The process of securing an SBA 504 loan can take anywhere from a few months to over a year. It all depends on the complexity of your business and the type of collateral you’re using to secure the loan. The SBA 504 loan program is designed to help small businesses grow and expand by providing them with long-term, fixed-rate financing for major fixed assets, such as buildings and equipment.