While Community Business Finance celebrates our 10th anniversary this year, we want to share the top ten reasons to use the 504 Loan Program. 504 loans provide businesses with financing for major fixed assets, such as real estate and equipment, to promote economic growth.
1. Equity Equals Security
Stop throwing money away on rent. Using a 504 loan to purchase your business property means building equity and investing in your business's financial future. Once the loan is paid off, you can enjoy the same revenue without paying a monthly property expense.
2. Keep More Money
With property ownership a business can enjoy tax benefits and appreciation on the real estate with a predictable monthly expense.
3. Low Down Payment
The 504 Loan Program offers financing for up to 90 percent of project cost. This means a down payment of as little as 10 percent. Compared to 25 or 30 percent down with a traditional loan, a 504 loan allows you to conserve more of your working capital.
4. Government Guarantee
The SBA created this program to increase the accessibility of business property loans to enhance the economic health of local communities. The government guarantee reduces the risk to lenders, increasing your access to financing.
5. Low Fees
504 loan fees are the lowest on the market, even compared to SBA 7(a) loans.
6. Long Term Financing
504 loans are fully amortized for 20 years. This allows business owners to pay for their facility over the long term while avoiding risky loan call provisions typical of traditional lenders.
7. Competitive Interest Rates
Borrowers will enjoy low interest rates that are based on market forces. The actual interest rate the borrower pays is calculated based on the debenture rate for the month the loan is funded. 504 loan rates are among the lowest available.
8. Fixed Interest Rates
Fixed interest rates allow borrowers to project their monthly occupancy costs without worrying about market instability or fluctuating rates.
Business owners enjoy great flexibility when deciding how to hold the title to their facility. Owners can put the title in their personal name, in the name of the business or even set up a holding company for the real estate. This allows owners to maximize the tax benefits of ownership and minimize liability in the manner best suited for the company.
Most businesses worth under $15 million are eligible for a 504 loan for their property and machinery needs. For more information about eligibility, check out our 504 School.
To get started with a 504 loan, fill out a short online form and a loan expert will contact you to discuss your needs.
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