Community Business Finance's mission is to encourage economic development throughout Texas and Louisiana. In carrying out this mission, we are dedicated to borrower education and seek to inform businesses about the underutilized 504 Loan Program. As a dynamic resource for our communities, we have created a library of information to help borrowers understand the 504 Loan Program and prepare them for a successful loan outcome.
While it might seem easier to renew the lease on your building, you should consider the many advantages of owning your business property. Even though there are costs associated with moving to a new location, property ownership can have a significant positive impact on your business. With the 504 Loan Program, owning provides financial advantages that leasing cannot, while offering control and long-term consistency.
When you get any business loan, the lender wants assurance that you will pay the loan back. There are several ways for a lender to protect itself, but two of the most common are for the lender to require collateral and a personal guarantee. A personal guarantee is a legal contract between a lender and business owners or other individuals to guarantee loan repayment. These guarantors agree that a lender has the right to pursue loan repayment directly from their personal net worth if the loan should go in default.
Community CDC is excited to announce our name is now Community Business Finance. After more than a decade helping businesses in Texas and Louisiana achieve their dreams, we want our name to better reflect our mission. We believe that Community Business Finance defines our goal to help businesses in our communities obtain the financing they need to expand and improve their companies.
All of us at Community Business Finance wish to thank our clients and our lending partners for their business in 2016. Since 2005, Community Business Finance has proudly helped hundreds of businesses borrow more than $200 million to expand their operations and create new jobs in Texas and Louisiana. While we are honored to have helped so many businesses realize their dreams, ultimately our goal is for any business that wants a 504 Loan to have access to a 504 Loan, or any loan that best suits their business needs.
As interest rates continue to rise, Community Business Finance wants to be sure that no one misses an opportunity to expand their business simply because they do not understand the 504 Loan Program from the SBA. Here are three things that business owners commonly misunderstand about 504 Loans:
This Saturday, November 26th, is Small Business Saturday. In an interview on The Today Show, SBA Administrator Maria Contreras-Sweet encouraged everyone to "shop small and dine small this Saturday." Positioned between Black Friday and Cyber Monday, Small Business Saturday allows us to use our holiday shopping dollars to recognize the importance of small businesses and the contributions they make to our communities and our country's economy.
Another myth about the SBA 504 Loan Program is that the prepayment penalty is much higher than for conventional loans. This is not true, as the prepayment penalty is based on the loan's debenture rate and not the effective rate. We will explain the difference, as many borrowers are confused as to how the prepayment penalty is calculated. First, however, we want to address why the 504 Loan has a prepayment penalty.