When searching for business financing, you are bound to have questions. We have collected some of the more frequently asked questions from companies that we proudly financed with Community Business Finance's 504 Loan Program.
1. Does my business qualify for a 504 loan?
Your business will usually qualify as a small business concern for Community Business Finance's 504 Loan Program if it has less than $15,000,000 in net worth and made less than $5,000,000 in net profit per year, averaged over the last two years.
The SBA generally defines a small business as a business that is independently owned and operated in the United States, organized for profit, and does not exercise a major influence in its field.
2. How much paperwork is involved?
Any loan requires a standard application with supporting documentation, but we are happy to report that the SBA has taken great strides in reducing the number of forms needed to apply for a loan. In fact, the SBA typically doesn't require any more forms or information than do commercial lenders. Copies of this information can then be electronically shared between the CDC and the third party lender, reducing time-consuming redundancy. Don't believe the myth that 504 loans have too much paperwork.
3. What is the maximum loan amount?
The maximum debenture for a 504 loan is $5.5 million. These amounts only refer to the SBA/CDC portion of the project. There is no maximum limit placed on the participating lender's portion of the project.
4. How can I use the loan proceeds?
504 Loan proceeds can be used for buying commercial real estate, new construction, or renovation of existing properties. Proceeds can also be used to purchase capital equipment, including heavy machinery. In addition, you can use funds to pay for closing costs and other soft costs.
5. Do I need a business plan?
Yes. Lenders can learn quite a bit from a company's business plan. Whether you are a start-up or an established business that wants to expand, a business plan will summarize your experience and the nature of your business. It gives lenders a clear explanation for how your business will succeed and pay back the loan. Community Business Finance has resources to help you create a business plan, as well as a list of other documentation you will need when applying for a 504 loan.
504 Loans Make Sense
Community Business Finance's 504 Loan Program allows you to keep more of your cash reserves through lower down payments, lower monthly payments and financed closing costs.
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You can also contact our offices:
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at email@example.com.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017 or email her at firstname.lastname@example.org.