Small business owners have a lot of their plates all day every day. Cash flow, sales, expenses, employee management, company growth, etc are all priorities at the forefront of most businesses. With so many items to manage, business owners often turn to leasing a building for the business without realizing there is another, better option.
By utilizing the SBA 504 Program, small business owners can purchase a building for the business with only 10 percent down. In addition, the interest rate is below market and FIXED for 25 years. This is a loan program ONLY for small business owners – and most small businesses are eligible.
Purchasing property for your business is the better alternative to leasing a building for your business. Now that you know there is an affordable way to make this happen, let’s review why owning is the better alternative.
Gain Peace of mind. One of the biggest perks of owning your own space is having the peace of mind of knowing that you have a secure home for your business and your occupancy costs will not fluctuate over time. You do not have to worry about rent increases or getting kicked out of your space.
Stable occupancy costs help you plan for the future. While leasing space, your rent is likely to increase year after year. When purchasing a building with a long term, fixed rate, such as the SBA 504 Loan, you know what your monthly occupancy costs will be for 25 years.
Every payment is an investment in a business owner’s future. The equity you build from owning your building can provide a comfortable retirement. When a business owner is ready to retire from the business, the building can be sold or rented out. The rent payments could serve as a steady source of income.
Smart entrepreneurs are always looking to maximize opportunities and minimize inefficiencies – there’s no better place to start than your rent. Why let your landlord prosper from your monthly payments when you could be writing that rent check to yourself?
Purchasing Means You Get to Enjoy Tax Benefits. Taxes also have a significant effect on a small business owner’s bottom line. If you decide to become a property owner, talk to your accountant about doing so as a separate legal entity from the business that will occupy the property. Even though you, as the business owner, will continue to pay rent, you can deduct those payments from your taxes.
Meanwhile, as a building owner and a legal entity, you will be able to take advantage of depreciation and amortization in the taxes you pay, as well as deduct the interest on your mortgage. It will also make it easier for you to keep the equity in the building if you decide to close or sell the business.
Preserve cash. In most cases, the monthly payment to own is about the same as it is to rent. Small business owners can use the retained working capital to buy inventory, hire new employees, purchase needed equipment or invest in other strategies to grow or improve the business.
Does owning make sense for you?
TMC Financing is a Certified Development Company that administered 504 loans on behalf of the SBA. TMC operates in California and Nevada and would be happy to provide a free consultation to see if a building purchase makes sense for you and your business. Contact us today for more information or to see if you are eligible.