Community Business Finance recently helped a client in Louisiana purchase property with a 504 Loan. The commercial janitorial service was unfamiliar with the 504 Loan Program, however the proceeds enabled the owners to buy the building that they had been leasing for many years. With a 504 Loan, they were able to put only 10% down and are very happy with a 20-year fixed rate mortgage on the SBA's portion of the loan.
By owning the property, versus leasing it, the company is building equity in an asset that enables it to enjoy substantial financial benefits and employ greater financial control. Through these benefits, the company expects to hire 25 new employees in the next two years.
How can your business benefit from property ownership?
As you build equity in your property, it becomes a more valuable asset that you can leverage to further grow your business with less risk. This equity also provides more options at retirement. You can choose to sell the property with your business at the time of retirement, or sell only the business and lease the commercial property, which produces an ongoing revenue stream during retirement.
By owning your business property, the interest on your mortgage loan is tax deductible, and you can take annual depreciation deductions on property taxes.
Increased Financial Control
The 504 Loan Program offers a long-term fixed-rate mortgage, which means your business can forecast monthly expenditures without worrying about annual rent increases. In addition, mortgage payments are often less than rent amounts when leasing a comparable office space. This not only saves you money in the long run, but also frees up more of your available cash each month. Protecting your working capital allows you to use that money for other business needs, like hiring new employees or increasing your inventory.
Andrew Carnegie said, "Ninety percent of all millionaires became so through real estate." While it is possible that buying your commercial property might make you a millionaire, the underlying truth of Carnegie's statement is that real estate investment can provide a solid foundation for growing your business.
When you are ready, you can get started with a 504 Loan by filling out a short online form and a loan expert will contact you.
You can also contact our offices:
Business Development Director
800-462-1017, ext. 203
713-457-1650, ext. 201