Tax Returns and the 504 Loan Program

Justice Oliver Wendell Holmes, Jr. reportedly said, "I like to pay taxes. With them I buy civilization." Civilization is not the only benefit of paying taxes. The most successful businesses in America are the ones that accurately report their income and faithfully pay their taxes. In fact, accuracy is crucial to the success of a business. It is also crucial when securing a business loan, such as Community Business Finance's 504 loan.

The 5 Cs of Credit: Character

We have discussed what types of information lenders and the SBA require when applying for a 504 loan, but how do they evaluate the information? Although every lending situation is different, most lenders use the Five Cs of Credit when assessing your loan application. These are Character, Capacity, Capital, Conditions and Collateral. We will examine each of these areas and why they matter in the lending environment.

Exposing the Myth: SBA 504 Loans Have Too Many Fees

Just like the myths that SBA 504 loans have too much paperwork and take too long to process, you have probably heard that 504 loans have too many fees. This myth most likely originated from the 7(a) program's tiered fee structure and has been applied to all SBA loan programs. Let's examine the facts about 504 loan fees.

What to Look For When Choosing a CDC

We have discussed many aspects of an SBA 504 loan, including why the SBA established the Certified Development Corporation Program to provide 504 loans to businesses. All 504 loans use a CDC to provide the SBA guaranteed portion of the loan.

Even though all CDCs must adhere to SBA regulations, not all CDCs are the same. Choosing the right CDC to partner with your bank in making a 504 loan can make a huge difference in your loan process experience.

Exposing the Myth: SBA 504 Loans Have Too Much Paperwork

When you think of government agencies, such as the SBA, you probably imagine mountains of paperwork. In fact, many lenders actively avoid promoting SBA 504 loans from fear of endless forms. Fear not! The SBA has taken great strides in reducing the number of forms needed to apply for a loan.

Exposing the Myth: SBA 504 Loans Take Too Long

There is a prevailing myth that an SBA 504 loan takes too long to prepare and process. While it is true that in the past the SBA was bogged down with laborious paperwork and sluggish processes, many things have changed. The SBA has worked intently to speed up their processing times and reduce their paperwork. The agency has invested in the technology to become more efficient and responsive. They really do want to make it easier to provide borrowers with the capital they need to promote economic growth.