SBA loans provide financing for almost every business purpose, including real estate, equipment, working capital and business acquisition. Usually the SBA 7(a) loan gets all the attention, and it is the most commonly used SBA loan. 7(a) loans are designed for working capital, and funds can be used toward purchasing a business. However, there are many benefits to the 504 Loan Program that should not be overlooked, even when purchasing a business.
Community Business Finance's 504 Loan Program provides long-term, fixed-rate financing for purchasing real estate, renovation or construction of new facilities, and buying machinery and equipment. While the funds cannot be used to directly purchase a business, a 504 loan can be the better choice if the business being acquired includes an asset purchase.
If there is equipment and/or a building involved in the business purchase, using a 504 loan to purchase these assets offers more benefits than a 7(a) loan. Unlike the variable interest rate of a 7(a) loan, the 504 Loan Program offers a fixed-rate loan with a down payment of as little as 10%. With a 504 loan you can also finance certain soft costs like architect and engineering fees, appraisals, and closing costs so there is less out-of-pocket expense at closing. This saves your business valuable working capital.
If the business acquisition is not strictly an asset purchase, you can get a concurrent 7(a) loan to cover those costs. Using the 504 Loan Program to fund the real estate and equipment portion of a business acquisition brings advantages that a straight 7(a) loan just cannot provide.
As a dynamic resource for the business community, Community Business Finance has an interest in helping your business succeed. We will help you determine the best financing for your business needs.
For more information on Community Business Finance's 504 Loan Program visit our 504 School, or 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.