Many small business borrowers may wonder if it’s possible to get multiple SBA 504 loans. The answer is yes! While sometimes viewed as a once-and-done funding tool, SBA 504 financing can actually be leveraged several times over, up to SBA’s lending limits. This is a smart move considering it is fixed rate, low down payment financing.
America has over 30 million small business owners. These innovative entrepreneurs are the engine of job creation and economic growth in our country. The U.S. Small Business Administration (SBA) ensures these businesses have the tools and resources necessary for starting and expanding businesses, kick-starting growth and creating good jobs.
One of SBA’s top priorities is to get capital flowing to small businesses. SBA’s array of loan programs were created to meet the needs of varying markets and entrepreneurs by ensuring access to quality capital on reasonable terms for small businesses. And, with today’s fixed interest rates for SBA 504 loans falling below prime…and an option for a 25 year term…it’s imperative that business borrowers consider the benefits of this lending program.
When the Time Comes to Expand Again, Utilize the Best Financing Option for Small Businesses
Working with a variety of businesses every day has given us a unique vantage point and understanding of how one expansion often leads to the need for another. For instance, moving into a new facility can create the need for new equipment. Or, new equipment can create the need for additional warehouse space. That’s why we see so many repeat borrowers with the 504 Loan Program. Honestly…facilitating continued growth is what this program was created to do and the mission of our non-profit organization is to advocate for small businesses. We know it’s not the big-named corporate businesses making the biggest impact on the economy…it’s you, the hard-working entrepreneurs serving our local communities!
If you are a small business owner, you are probably familiar with the U.S. Small Business Administration (SBA), and may have even used one of their loan programs before. The SBA established the 504 Loan Program over 30 years ago. This program works in conjunction with your bank to allow business owners to receive up to 90% financing for the acquisition, construction, improvement or expansion of commercial property or for acquiring heavy machinery or equipment. The program essentially consists of three key elements: 50% of the project’s total cost is provided by a lending institution, usually a bank; 40% is provided through the SBA’s 504 Loan Program; and 10% equity is provided by the borrower. (Start-up businesses and single-purpose facilities require a slightly higher equity contribution.)
By requiring a smaller down payment, the 504 can help the business conserve their operating capital, while the structure of the program makes it attractive to financial institutions. Plus, the fixed rate and long loan term insulates borrowers from rising interest rates and future balloon payments or call provisions. The portion of the loan funded by the SBA is some of the least expensive financing available to businesses. In addition, the 504 rate is locked in for up to 25 years.
12 benefits that prove SBA 504 Loans were specifically designed to help businesses expand and prosper
SBA 504 Loans from Growth Corp feature:
- Low down payments (10% in most cases)
- Low, fixed interest rate on the 504 portion
- Long loan terms – up to 25 years
- The ability to include furniture, fixtures and fees
- An option for refinancing commercial debt
- Payment stability
- Preservation of working capital
- Protection from balloon payments
- The ability to include leasehold improvements
- Up to $5 million for SBA portion of the loan, and no limit on the overall project size
- The option of using the 504 Loan Program multiple times to continue expansion
- The ability to keep your current bank/lender
SBA Has Expanded Loan Availability
There is plenty of money available for lending. In fact, the SBA has recently displayed significant effort in making the 504 Loan Program available to even more businesses. With higher loan limits, expanded eligibility standards, and a new debt refinance option, more businesses are now able to utilize the 504 than ever before. Plus, the 504 offers 90% loan-to-cost financing for most commercial real estate projects (inclusive of land, existing building, ground-up construction, furniture, fixtures, equipment, soft costs and closing costs), SBA 504 loans are a very powerful tool, yet they remain under-utilized because many small business owners just aren’t aware this financing option exists. Last year, 504 loans helped fuel just shy of $5 billion in new capital investments for 5,800 businesses throughout the U.S.
For more information: SBA 504 Expansion Financing
Why Growth Corp?
Because we help get deals done. Growth Corp is the largest CDC in Illinois, the top 504 Lender in Chicago and a market leader in quality, consistent service. In addition, Growth Corp has earned an Accredited Lender status with SBA, which grants us the ability to expedite the processing of loan approvals and closings. Contact any member of our Lending Team to discuss your goals and ideas.