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Small Business SBA-504 Loan

[ 0 ] Aug. 14, 2014 | SBO Editor

SBA-504 loans

Small business owners looking for capital to grow their company often miss one of the best kept secrets in financing – the SBA-504 loan, according to CDC Small Business Finance. The SBA-504 loan is a great tool to help small businesses grow, but it’s often left out of the discussion business owners have with their financial advisors.

SBA-504 Loans Help Biz Grow

SBA-504 loans are specifically designed to help small business owners buy, improve or construct a building, or purchase large equipment.

“The SBA-504 loan is a great tool to help small businesses grow, but it’s often left out of the discussion business owners have with their financial advisors,” said Kurt Chilcott, CEO/President of CDC Small Business Finance.

SBA-504 financing appeals to small business owners who are weary of paying rent and want to build equity for themselves. The program allows entrepreneurs to access low-fixed-rate, 20-year financing upwards of $20 million with a minimal down-payment (10%). The current SBA-504 rate is 4.94%, fixed for 20 years.

The most significant advantages of SBA-504 loans include:

  • Preserving cash to meet working capital needs
  • Tax savings
  • No additional collateral required
  • No balloon payments

To qualify for an SBA-504 loan, businesses must be:

  • Owner-operated
  • For profit
  • Organized as a sole proprietorship, corporation, partnership or LLC
  • Have a business net-worth below $15 million and a net-profit after taxes below $5 million within the last two operating years

The SBA-504 loan program was created to stimulate economic development by helping small businesses expand and create new jobs. Certified development companies like CDC Small Business Finance partner with banks to provide these specialized loans.

To further help small businesses expand, the SBA-504 program includes several extra provisions, including those for energy efficiency and veteran-owned businesses. The SBA-504 “Green” Loan provides higher lending amounts for small business owners who want to buy or upgrade commercial/industrial buildings and make them more energy efficient. Buildings over $20 million can be financed using this unique program offered jointly by a bank and CDC Small Business Finance. Small business owners need only demonstrate a projected 10% reduction in energy costs by deploying one or more energy-saving improvements (e.g. insulation, lighting, heating/air conditioning).

Military Veterans

Military veterans who own small businesses can benefit from the VetLoan Advantage provision which provides a cash rebate up to $3,000 for any funded loan.

The current SBA-504 rate is 4.94%, fixed for 20 years. For more info, contact www.sba.gov.

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Category: Features