SBA (Small Business Administration) financing is often considered the gold standard of small business loans because the terms are typically more attractive than other financing options. SBA loans tend to carry the lowest interest rates and the longest repayment terms, all while offering substantial loan amounts that small business owners may not otherwise qualify for. If SBA loans come with such advantageous terms, many small business owners wonder – is it hard to get an SBA loan?
The short answer – No, it is not hard to get an SBA loan! Most businesses are eligible and qualifying is easier than you might think!
The SBA 504 loan is specifically designed to help small businesses expand by purchasing fixed assets such as real estate and equipment. It can also be used to finance construction and renovations. Most for-profit businesses in the United States are eligible for an SBA 504 loan. There are a few stipulations, but generally the 504 loan can accommodate a unique array of business needs.
Bottom line – do not rule your business out.
Before we examine the details of how to prequalify for an SBA 504 loan, let’s take a closer look at how the loan is administered.
How is SBA 504 Loan Issued?
The 504 loan has a unique structure, in that it is a partnership between a non-profit Certified Development Company (CDC), such as TMC Financing, which administers the SBA portion of the loan, and a conventional lender such as a bank or credit union. A CDC’s mission is to help match you with the loan product that will best support your businesses growth, gain long-term success and create a positive impact on your community. TMC Financing will guide business owners through the entire loan process and act as the owner’s advocate throughout the life of the loan.
In a typical SBA 504 loan scenario, the SBA would provide 40% of the total project costs, a participating lender would cover up to 50% of the total project costs, and the borrower would inject a 10% down payment.