Grow Your Business With An SBA 504 Loan

As a small business owner, it’s critical to have access to the capital required to not only sustain your operations but to also expand them. Unfortunately, many entrepreneurs quickly discover that the terms of traditional commercial lending programs are too restrictive (or too expensive) for their specific corporate needs. If you’re currently exploring finance options beyond conventional bank financing to grow your small business, you may want to consider an SBA 504 loan.

Know The Benefits Of A SBA 504 Loan Model

Designed explicitly to boost economic development and job creation for small businesses, an SBA 504 loan offers fixed-rate, long-term financing to acquire assets that expand or modernize current company operations. While an SBA 504 cannot be used as working capital or as a resource to refinance debt, it can be used to purchase:

 

  • Real estate
  • Equipment
  • Technology
Like many conventional lending models, SBA financing is generally offered through banks and other financial institutions. However, SBA programs are issued through lending corporations that also participate in the Small Business Administration loan guarantee program. Why is that important? Unlike conventional bank loans, should your business fold and you’re forced to default on repayment, the SBA promises to buy back a percentage of the loan from the bank.

Does Your Business Qualify For This Flexible Lending Option?

Are you eligible for SBA 504 financing? Business owners applying for this loan type must meet qualification requirements including:

 

  • Business must be a sole proprietorship, LLC, corporation, or partnership
  • Company must be for-profit and non-publicly traded
  • Organization must conduct business in the U.S. or its possessions
  • Ownership must include 51% U.S. citizens or registered aliens with a green card
  • Company’s tangible net worth may not exceed 15 million dollars
Finally, if the lessee is using the capital from the SBA 504 loan to acquire real estate, the company must occupy at least 51% of the total space to be bought.

SBA 504 Loans Provide Up To 90% Project Financing

One of the biggest benefits offered from this particular SBA lending model? Conventional bank loans often only cover 75-80% of expected project costs. However, the SBA 504 program typically finances up to 90% of the total project expenditures for a dynamic, agile lending solution well suited for a multitude of unique and diverse funding needs.

Want to hear more about optimizing access to mission-critical capital with an SBA 504 loan? Contact Avid Commercial today!

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