Nevada has a growing economic foundation from world class gaming, recreation, tourism and many other one-of-a kind business opportunities. A report issued by the Small Business Administration (SBA) in 2018, stated that small businesses made up 99.1% of all Nevada commerce. One of the secrets to Nevada’s recent economic growth is small business financing. The right financing can mean the difference between a steady business and a thriving business. Therefore, Nevada small business owners are looking for new ways to invest in their facilities to compete in this growing market. The SBA 504 Loan Program is an accessible and affordable financing solution for the Nevada entrepreneur.
SBA 504 Real Estate Financing vs. Conventional Financing
As a Nevada business owner it is important to understand the differences between the various financing options available. Factors that should be considered include the following:
- The size of the down payment
- The term of the loan and its amortization
- The presence or absence of balloon payments
- Whether the interest rate is fixed or variable
The terms of a conventional loan can vary widely depending on the lender, but the down payment can be anywhere from 25-40 percent. Another challenging element of a conventional loan are balloon payments. A balloon payment occurs when the amortization exceeds the term of the loan. In other words, borrowers must pay a large sum of money at the end of the loan’s term OR refinance the loan.
Conversely, the SBA 504 loan program allows small-business owners to finance commercial real estate and other fixed assets with long-term, below-market, fixed interest rates, with NO balloon payments. The 504 loan is fully amortized for 25 years and no additional collateral is required. Ultimately, business owners can pay for their facility over a long term with predictable monthly payments.
SBA 504 Eligibility Requirements
One of the best aspects of the 504 program is nearly all for-profit businesses are eligible. However, the business must occupy at least 51 percent of the building. If the financing is for the construction of a new building, the business must occupy 60 percent of the building. The tangible net worth of the business cannot exceed $15 million and the after-tax profit for the last two years cannot exceed $5 million. Alternatively, additional size standards could be met. These loan requirements might sound confusing but that is why it is important for a Nevada business owner to utilize a Certified Development Company, such as TMC Financing, to help navigate eligibility.
The 504 program & Support from Certified Development Company
A Certified Development Company (CDC) is a nonprofit corporation built to support economic development within its community through the SBA 504 Loan Program. CDCs are regulated by the SBA and strive to be the owner’s advocate throughout the life of the loan. CDCs complete the SBA paperwork and guide the business owner through the entire loan process.
About TMC Financing
TMC Financing is the No. 1 CDC in Northern California and has ranked in the top five CDCs nationwide for two decades. During the past 35 years, TMC has provided over $9 billion in financing for more than 5,000 businesses throughout California and Nevada. For more information on SBA 504 loans and the local businesses they support, visit tmcfinancing.com.
More Nevada Business Financing Resources:
Nevada SBDC – guides and assists Nevadans looking to start and grow businesses and find access to capital.
HispanicBusinessNevada.com – an innovative portal in to the Hispanic business demographic and business resources.
Southern Nevada Resource Links – this booklet contains valuable links and contact information for 16 resource partners who assist small businesses in the development, growth and sustainability of their businesses.
Nevada Department of Business & Industry – provides comprehensive statewide resources to help educate business owners.