Why Should I Think About An SBA 504 Loan?

Here is a wikipedia entry that has more in-depth information
https://en.wikipedia.org/wiki/SBA_504_Loan

SBA 504 loans used for the expansion or acquisition of real estate with a term of 20 years, at the same time as equipment loans generally have a term of 10 years. The SBA 504 loan has a low rate of interest, that's fixed for the term of the loan.

The maximum SBA 504 loan amount is $5.5 million. There is no maximum overall project fee. The SBA portion cannot exceed 40% of the eligible project costs.

The maximum SBA 504 loan amount is $5.5 million. There is no maximum overall project fee. The SBA portion cannot exceed 40% of the eligible project costs.

Fees involved with SBA 504 loan; SBA fees, approximately 2.5% of SBA portion of the loan and secondly the lender fees, negotiated with the lender, but usually 1-2% on lender loan.

Yes, you can prepay your SBA 504 loan; but SBA 504 loans are funded in a different way as compared to bank loans and consequently have specific repayment terms. Loan assumption may be a possible alternative to loan repayment based on your current situation.

With low down payments and low, fixed, long term interest rates, the SBA 504 loan allows businesses retain working capital. It eliminates the uncertainty associated with refinancing and balloon payments, enabling long-term planning and business enterprise expansion. For lenders, the loan gives lower risk through shared financing, a low loan-to-value ratio and the capability to earn CRA credit.

Collateral taken to acquire the SBA 504 loan usually consists of a second mortgage at the land and property or a second lien on the equipment that is financed.

The SBA not requires that the personal resources of entrepreneurs be used to lessen the SBA funded part of the entire financing program. Lenders must follow practical lending practices and require that resources either be injected or pledged as collateral for a specific loan, if considered sensible.

Sometimes. Once the project property is land and building, also it was acquired less than nine months prior to the application is received by SBA, the financing used to get the land and building might be considered "interim financing" and become qualified to become compensated-served by 504 loan proceeds.