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Small Business Administration (SBA) loans are backed by the government and designed to assist small business owners in their efforts to grow their businesses. If you have been considering applying, you may have asked yourself: is it hard to get a 504 SBA loan?
The good news is that 504 loans are more accessible than ever as interest rates have declined and regulations have changed to expand eligibility. These changes make it an ideal time for small businesses to apply for funding.
However, the 504 loan process can be fairly complicated because it consists of three parts:
- 50% of the loan comes from a regular real estate bank loan
- 40% comes from an SBA loan that must be handled by a Certified Development Company (CDC)
- 10% comes from you, the borrower
Given these complexities, having an experienced professional to guide you through the process is essential.
Business Funding Group (BFG) has decades of experience helping small businesses secure SBA 504 loans. We have an in-depth knowledge of eligibility for the loan programs and the process of applying and obtaining approval.
Call us today to discuss your eligibility for a 504 SBA loan.
SBA 504 Loan Requirements
SBA 504 loans are an excellent option for small businesses due to their borrower-friendly terms. Long-term repayment periods, fixed interest rates, and low down payments make these loans attractive.
The SBA loan programs aim to make business loans more accessible to small businesses in the U.S. The SBA has demonstrated its continued commitment to this goal by making several changes to eligibility standards.
The most important criteria lenders look for in a small business are cash flow and good credit. The borrower’s credit score generally should be 700+. Collateral, equity, or downpayment are additional factors considered when deciding whether a loan application will be approved.
Other factors that determine eligibility for SBA 504 loans include:
- The business must be for-profit and located in the United States
- The business must have a tangible net worth of less than $20 million
- The business must earn an average net income of less than $6.5 million, after federal income tax
- The business must be considered a “small” company as defined in the Code of Regulations
If all of these requirements are met, there is no reason to believe that getting a 504 SBA loan is difficult.
Application and Approval Process
An SBA 504 loan can be used for fixed assets such as buildings, machinery, and equipment—real estate purchases being the most popular.
Documentation will be required as part of the loan application process. Business owners must be prepared to share business and personal tax returns, interim P&L and balance sheets, a personal financial statement and more. The paperwork needed to support the loan application can be daunting, so working with a packager like BFG can be a tremendous help! Applications can be submitted to the appropriate parties through BFG fairly quickly as long as you, the borrower, get the documentation needed together in a timely fashion.
Then, a certified development company will evaluate the application, followed by approval if requirements are met. Through the vast numbers of 504 loans BFG have placed in the last 10+ years, we know the ins and outs of how the CDC’s work and are on friendly terms with several of the people who work there. We also have relationships with a vast network of lenders, enabling us to place your loan with the most appropriate lender. Final authorization, loan closing, and disbursement follow.
The most essential step in the application and approval process is to complete all documents fully and accurately. If documents or information are missing, the loan could be denied. To avoid such issues, BFG could assist you from the beginning of the application to the end of the disbursement process, dispelling your fear that getting a 504 SBA loan can be challenging.
Call BFG for Help Applying for an SBA 504 Loan
If you have a successful small business and are looking to grow, you might be asking yourself: is it hard to get a 504 SBA loan?
The SBA 504 loan program has become more accessible due to declining interest rates and the relaxation of eligibility requirements. Our team of experts could greatly simplify the application process and facilitate loan approval, allowing you to focus on your business.
If you are considering applying for an SBA 504 loan, schedule a free consultation with BFG to discuss your business goals and eligibility.