Commercial rents are high and on the rise. Have you considered purchasing a building for your small business? With the SBA’s 504 fixed-rate option and low down payments, it may be more affordable than you think. Plus there are usually tax benefits to owning your building instead of leasing space.
First of all – what is a 504 loan? It is a Small Business Administration (SBA) loan that is used to finance commercial real estate, construction, renovations, or refinance with fixed rates and long terms. SBA’s 504 loans must be done through a CDC (Certified Development Companies) and normally requires a bank partner to contribute up to 50% of financing. As a CDC lender, SBAC can finance a 504 loan of up to $5.5 million but there is no project size limit.
What if your business doesn’t need a brick-and-mortar storefront, but you do need expensive manufacturing equipment? Long-term equipment financing is also available through SBA 504 financing and the benefits of this loan can still apply!
There are three major benefits to using this program to purchase your commercial real estate and/or equipment:
Low Interest With Fixed Rates:
There are a lot of “what ifs” when it comes to buying commercial real estate, but one thing you don’t have to worry about is your rate going up after you receive your 504 property loan with us. By getting an SBA 504 loan through SBAC you have access to below-market fixed rates and long terms.
Terms that are offered with these loans are 10 years, 20 years, or 25 years, each with its own interest rate and no balloons. This means you will have several years to pay off your loan with the same low, fixed-rate as when you signed.
Small Down Payments:
Down payments can be as low as 10%, meaning you could get up to 90% financing on your loan.
With interest rates on the rise, now is the time to consider if an SBA 504 loan is the right choice for your business. This month, May 2022, the 25-year fixed rate for 504 loans is 5.12%, and conventional (non-SBA) loan interest rates are projected to increase. Take advantage of what an SBA 504 loan’s fixed rates can do for your business now.
Our team at Small Business Assistance Corporation would be happy to answer your 504 questions and help your small business navigate the lending process. Contact us today to learn more!
Article written by Wendy Jeffers
SBAC Senior Loan Officer
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