{"id":11038,"date":"2019-05-22T11:46:19","date_gmt":"2019-05-22T18:46:19","guid":{"rendered":"https:\/\/www.tmcfinancing.com\/?p=11038"},"modified":"2021-05-10T20:30:37","modified_gmt":"2021-05-11T03:30:37","slug":"top-10-reasons-why-applying-for-an-sba-504-loan-is-worth-it","status":"publish","type":"post","link":"https:\/\/www.tmcfinancing.com\/es\/top-10-reasons-why-applying-for-an-sba-504-loan-is-worth-it\/","title":{"rendered":"10 razones principales por las que vale la pena solicitar un pr\u00e9stamo 504 de la SBA"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]\"\"<\/span><\/p>\n

Loans backed by the Small Business Administration (SBA), such as the SBA 504 Loan<\/a>, are the best deals in small business lending. There are features of the 504 Loan that cannot be found in alternative financing options.\u00a0 Those benefits however, are often overlooked or even unbeknownst to small business owners.<\/p>\n

For those not familiar, the 504 Loan is an affordable loan option created by the SBA to support and encourage small business growth and in turn, improve our economies. The loan allows small business owners to purchase fixed assets, such as a building or equipment<\/a> for their business, with a low down payment and a below-market fixed interest rate<\/a>.<\/p>\n

The 504 Loan consists of three parts, a conventional bank, a Certified Development Company<\/a> (CDC), and the small business owner\/borrower. There is a first mortgage from the conventional bank that supplies 50 percent of the total project cost, a second mortgage from the CDC\/SBA that provides 40 percent of the total project cost, and down payment of at least 10 percent from the borrower. This unique structure is what allows the loan to be accessible to so many business owners. Banks are more likely to loan money when the loan is backed by the SBA.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_round_chart stroke_width=”2″ values=”%5B%7B%22title%22%3A%2250%25%3A%20Conventional%20Lender%22%2C%22value%22%3A%2250%22%2C%22color%22%3A%22blue%22%7D%2C%7B%22title%22%3A%2240%25%3A%20CDC%22%2C%22value%22%3A%2240%22%2C%22color%22%3A%22green%22%7D%2C%7B%22title%22%3A%2210%25%20Borrower%22%2C%22value%22%3A%2210%25%22%2C%22color%22%3A%22turquoise%22%2C%22custom_color%22%3A%22%236dab3c%22%7D%5D”][vc_column_text]The 504 Loan is the most affordable option for small business owners yet oftentimes, borrowers go straight to a conventional bank thinking that is the only or easiest way. Applying<\/a> for an SBA loan may require a few more steps than a conventional loan however it saves small business owners the most money. Here is why applying for an SBA 504 loan is worth it:<\/p>\n

1 – Low down payment<\/strong><\/p>\n

The low 10 percent down payment is one of the biggest attractions of the 504 Loan Program. Conventional loans often require a 20-40 percent down payment, an unattainable figure for many business owners.\u00a0 The low down payment opens the doors for many small business owners to purchase a building who otherwise couldn\u2019t afford it.\u00a0 Certain circumstances require a down payment of 15 percent, such as when the loan is being used to purchase a special use property or if the business has been in operation for less than two years. However, this is still significantly less than conventional financing.<\/p>\n

With the 504 loan\u2019s low injection, businesses retain precious working capital. Renovations and soft costs can also be financed, allowing further cash savings.<\/p>\n

2 – Below-market, FIXED interest rate<\/strong><\/p>\n

The SBA second mortgage is a fixed rate tied to the 10-year Treasury, unaffected by market instability or inflation expectations.\u00a0 The rate is consistently low and stable, being under 6 percent for the past 10 years. Today, that rate is 4.3 percent fixed for 25 years.<\/p>\n

3 – Long term<\/strong><\/p>\n

The 504 rate has loan options of 10-years, 20-years, and 25-years. It is fully amortized through the life of the loan, meaning there is no balloon payment at the end of the term. This long term, below market rate provides small business owners with affordable monthly payments and enables them to control their overhead costs for the long term.<\/p>\n

4 – Wide scope of uses\u00a0<\/strong><\/p>\n

The 504 loan is widely known as the commercial real estate loan, however it can be used for much more. Funds from a 504 loan can be used for:<\/p>\n