Advantages of Prequalifying for an SBA 504 Loan

It’s always advantageous to start early. If you’re thinking about a loan to finance the purchase or renovation of commercial real estate or equipment for your business, a good place to begin is by prequalifying for an SBA 504 loan. The best part is that you can get started on the prequalification process whether or not you have identified the property you wish to acquire or even decided on the form of financing you are interested in. Prequalifying for an SBA 504 loan is quick and at no cost to you. By prequalifying before choosing a property, you give yourself a headstart on others that are also shopping for a property.

What Is Prequalification?

Prequalification is a quick assessment carried out by your Certified Development Company (CDC), clarifying your options and confirming your purchasing power. It is a process that lets you know in advance what kind of results you can expect if you applied for an SBA 504 loan. It is important to know that prequalifying is not the same as applying for a loan, and it does not entail any obligation or commitment on the part of the applicant.

Why Prequalify for a Loan?

Prequalification provides valuable new information to you. When the right opportunity presents itself, prequalification gives you the confidence of knowing that the purchase price is right for your business. It can help you:

  • Understand what to expect from a lender
  • Get an idea of how much down payment your loan may require
  • Know how much cash you may have available to use as a down payment on a property
  • Figure out how much total financing you may expect to receive
  • Realize what you can afford and the monthly payments to expect with different purchase prices

This information is also valuable to commercial real estate brokers and sellers. Prequalification is an attractive trait for a business to have when searching for financing sources, giving you leverage and ensuring that you are prepared to move forward in a timely manner. A prequalification letter can also give you an advantage when making an offer on a property.

Finally, it gets you organized. The documents and information required for prequalification will be beneficial to have on hand throughout the financing process. Having this information at your fingertips will help when you decide to pursue a loan, and will speed the process up considerably.

How to Prequalify

The information required for the prequalification process is easily assembled. Your chosen CDC will have a few forms for you and your partners (if any) to fill out, including three years of personal and business tax returns, a personal financial statement, and interim financials. Borrowers can expect to receive feedback on their 504 loan prequalification in as few as 18 hours.

Throughout the process of obtaining SBA 504 financing, guidance from skilled professionals is crucial. A prequalification gives you the opportunity to establish a relationship with a CDC who will be your advocate from start to finish. TMC Financing is an SBA Premier Certified Lender and a high-volume loan provider. Contact a TMC loan expert to find out more about the prequalification process for 504 loans and how to put your business one step ahead.

Download the pre-qualification application now. 

Barbara Morrison

Barbara Morrison

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison