When you’re interested in buying a building to start or expand your business, consider an SBA loan. The SBA 504 was created to help new businesses purchase (or build, or remodel) a structure to house their commercial enterprise. This brings the daunting process of buying a building within reach for startups and entrepreneurs.
Benefits of an SBA Loan to Purchase Commercial Property
The SBA loan makes purchasing property easier due to its:
- Comparatively low down payment: You may need to provide a down payment of only 10 or 15%, so you have the more liquid capital to use for other startup needs.
- Favorable fixed interest rate: A fixed-rate loan from SBA frees you from worry about rates going up and restricting your business cash flow. Fixed costs help you plan your business budget more easily and keep your business costs stable to enable survival and growth.
- Extended repayment period: You have 25 years to repay—almost as much as you would have for a home mortgage. This helps keep payments low and preserves your company cash flow as well.
- No balloon payment requirement: With other loan types, you can be held hostage by balloon payments, which would require you to be ready to pay off any remaining loan balance or refinance the loan at terms you can’t predict.
- Status as collateral: While you enjoy the benefit of using the building over many years, to run your business and earn a profit, you are still in the process of paying for it.
- Simple qualifications: Most small, for-profit businesses qualify. Also, your business must use more than half (at least 51%) of the building’s square footage, or 60% for new construction.
- Investment value: Owning commercial property could provide you tax deductions or credits, increasing resale value, and much more. Since your business location will likely be your largest expense, you can freeze your costs with your SBA “business fixed-rate mortgage,” so to speak. Essentially, you’ll be your own landlord. In addition, you could consider renting out the additional space in the building to offset your costs. In the future, you could partially fund your retirement by continuing to rent out space or by selling the building.
Get all the benefits of an SBA loan by contacting Eagle Bend Capital Financing today.