The SBA 504 is a loan program providing fixed-rate and long-term financing for major fixed assets. It promotes job creation and business growth with a maximum financing function of $5 million. Here are the most significant benefits of SBA 504 loans.
The SBA 504 Offers 90% Financing
At 90%, SBA 504 loans offer the best loan rates available. Conventional loans offer lower rates but cover a lesser percentage of the project cost, around 75%-80%. They are also short-term with a final balloon payment which inconveniences most entrepreneurs.
The SBA 504 Have Fixed Rates
Unlike bank loan rates which are variable, the SBA 504 comes with fixed rates. You no longer have to worry about loan rates increasing with little to no knowledge. The variability of bank-issued loans will probably tighten the credit standards for small businesses.
The Rates are Competitive
Most businesses realize after closing their SBA 504 loans that the rate competes with other financing options. Their rates are mostly better with a 90% financing and a fixed, long-term rate.
An Easy Application Process
The borrower handles minimal paperwork as there are Certified Development Companies who hold most of the paperwork. The amount of paperwork necessary is equal to that of banks but is handled by professionals. They make it easy since they are experts in handling these loan types.
The SBA 504 is Flexible
The SBA 504 loans are flexible and can quickly adapt to your business plan. If you feel that your business will not need any extra cash at the moment, you can structure a program for the loan. A ten-year term will alleviate the premium prepayment after the first five years of the loan.
The SBA 504 has Lower Monthly Payments
As a business owner, you may find it profitable to take advantage of the low monthly payments offered by the SBA 504 loan program. Their cash is kept primarily to cushion against inflation and provide working capital to grow businesses.
The SBA 504 loans create a more competitive market and an opportunity for business owners to grow their businesses effectively. Contact a professional to learn more about what you gain to benefit by choosing this loan type.