Why should a savvy small business owner like yourself consider taking out an SBA 504 loan?
If you are looking to expand or modernize, the SBA Section 504 Loan Program provides you with financing for which you might not otherwise be qualified for, allows you to purchase the fixed assets your business needs to grow (such as real estate or equipment), and helps your community all at the same time.
504 borrowers play a vital role in the economic growth of the communities they serve with the jobs they are able to create by utilizing the 504 loan program. According to the SBA, the 504 loan program has created over two million jobs since 2012 and represents a “win-win-win for the small business, the community, and participating lenders”.
504 loans are made available through Certified Development Companies (CDCs) – like us! CDCs work with the SBA and participating lenders to provide financing to small businesses to help drive economic development in their communities.
HERE’S HOW IT WORKS:
The SBA 504 Loan Program creates a 3-party partnership:
A private institution, such as a commercial bank, typically provides 50% of the total project financing. The bank holds a first mortgage lien position on the assets being financed, which incentivizes them to offer more reasonable terms and favorable rates.
The CDC – in this case, SEDCO – finances up to 40% of the project.
Your company normally contributes only 10% of the total project cost. That’s a substantial savings of working capital for you!
Because 504 loans minimize the risks for lenders, they are also more likely to approve small businesses that might not qualify for a traditional business loan.
If you qualify, you’ll receive 90% financing for a long-term, fixed-interest rate on your SBA loan and can put your proceeds toward:
The purchase of existing buildings
The purchase of land and land improvements
The construction of new facilities or modernizing, renovating, or converting existing facilities.
The purchase of long-term machinery
Construction contingencies
Debt refinance
Debt refinance with expansion
Interest carry and some loan fees
Professional fees (appraisal, environmental, title insurances, doc stamps, etc.)
Learn more about The Good, The Bad, and the Not So Ugly of SBA 504 Financing.
A 504 loan is an investment in your business’ future – allowing you to buy the assets you need to grow and thrive. It’s also a great investment in your community, creating jobs, and reinvigorating the local economy! Interested in how a 504 loan can boost your business? Contact us to learn more.
Sunshine State Economic Development Corporation (SEDCO) is a not-for-profit certified development corporation (CDC) licensed by the U.S. Small Business Administration to offer the SBA 504 Loan Program throughout the state of Florida. SEDCO can provide your expanding small business with alternative financial resources, sound financial advice, and business acumen. Helping small business succeed is our business. For more information, visit our website or contact us.