Busting Myths Around SBA 504 Loans
Many small business owners looking to finance growth or expansion may overlook the SBA 504 loan program because of common misconceptions, even though these loans may provide them with the most favorable financing scenario.
Common Myths Around SBA 504 Loans Include:
- Myth #1: Only For Startups: Contrary to popular belief, 504 loans are not exclusively for startups. Established businesses looking to expand through real estate or equipment purchases can benefit, too. The program supports job creation and economic development by providing long-term, fixed-rate financing.
- Myth #2: Complex & Time-Consuming Application Process: While some might perceive the application process as daunting, it’s often simpler than anticipated. Working with a Certified Development Company (CDC) such as Community Business Finance, applicants can navigate the process smoothly. Compared to traditional loans, 504 loans offer competitive rates and terms.
- Myth #3: Limited Use of Funds: Another myth is that 504 loans are restricted in their usage. In fact, they can finance a range of expenses, including land purchases, building acquisitions, construction costs, and even closing costs and interim interest. This flexibility makes it an attractive option for various business needs.
- Myth #4: High Down Payment Requirement: Some believe that 504 loans demand substantial down payments. However, the program typically requires a down payment of 10%, allowing businesses to preserve capital for other needs. Additionally, the loan structure often includes longer repayment terms, easing financial strain.
- Myth #5: Only for Specific Industries: While certain industries might utilize 504 loans more frequently, they are not exclusive to them. Businesses across sectors, from manufacturing to hospitality, can leverage this financing avenue for growth initiatives. Additionally, 504 loans can be used for special-purpose/single-purpose real estate purchases.
We can help! Community Business Finance specializes in originating, processing, and servicing SBA 504 loans for small businesses in Texas and Louisiana. A down payment of as low as 10%, a loan term of up to 25 years, below-market fixed rates, and many other benefits will make your dream become reality. Call us today to tap into our expertise and find out if an SBA 504 loan can help make your business dreams a reality!
