The SBA 504 loan program is comparable to conventional financing, with the additional special benefits of SBA when it comes to purchasing owner-occupied properties for your business. For businesses that are looking to add a new office, warehouse, or real estate to their existing business, this program is perfect. Purchasing real estate under the SBA loan program must be owner-occupied, i.e. the operating business must occupy at least 51 percent of the building they are buying.
Under the 504 program, the total financing can be in the tens of millions vs. the 7(a), which is capped at $5,000,000.
Our philosophy at Business Funding Group (BFG) is to do as much of the work necessary to get you an SBA loan so you can spend as much time as possible running and growing your business. We specialize in just getting SBA loans approved. Our efforts will free you to concentrate on what is most important to grow your business, and the combination of both our efforts will yield the best financing possible.
Especially in a 504 loan, which has more moving parts than a 7a loan, our method of working with you will not only save time in getting the loan but make the whole process much more successful!
We stay with you until the loan is fully funded!
We never ask for a retainer and only receive a fee when the loan is funded. Because of this fact, our interest is always totally aligned with you.
In 1953, President Eisenhower noted that almost 50 percent of all jobs in America were created by small businesses. From this fact, he created the Small Business Administration. In 1960, the SBA created the SBA loan guarantee program. The loan program guarantees that if a bank follows SBA rules and procedures it will receive from the SBA a 75-90 percent guarantee if there is a default of the loan.
This guarantee allows banks to make loans that they might not otherwise make, such as relatively new businesses, businesses in emerging markets, and complicated businesses that they have not underwritten before.
The 504 SBA loan program is available for business owners looking to purchase real estate associated with their business (i.e. warehouse or office space). The program allows you to obtain up to 90 percent financing as opposed to traditional bank financing, which typically offers 65 – 75 percent loan to value. This advantage makes real estate ownership more obtainable for small business owners.
Your financing is divided into two separate loans: one from the bank (the “A” piece) and one coming from the SBA (the “B” piece). The A piece is a traditional conventional owner-occupied loan with at least a 5-year fixed rate, 10-year term, and 25-year amortization. The A piece represents 50 percent of the total project.
The B piece from the SBA, through a Community Development Corporation (CDC), gives you the option for a 20 or 25-year fixed rate, term, and amortization. This is one of the great values of this program: you never have to worry about the rate increasing! The B piece represents 40 percent of the project.
As the business owner, you are required to contribute the remaining 10 percent of the project, which is much less than a traditional bank commercial real estate loan.
An SBA 504 loan is the most complicated of SBA loans because it involves a bank granting a traditional first mortgage and a community development corporation (CDC) approving the SBA loan.
Our decades of management experience in accomplishing these types of loans will result in a much more efficient and successful process.
Factors involved in qualifying for the loan:
Are you looking to purchase real estate for your business? The SBA 504 loan program might be right for you! Click here to apply or talk to one of our experts today to see if this program fits your needs.
(917) 593-5013