SBA 504 loans are long-term financing options offered by the Small Business Administration (SBA) that provide businesses with access to low-interest rates and flexible terms. By understanding all aspects of this type of loan, you can make an informed decision about whether it is right for you.
When taking out an SBA 504 loan, you’ll have access to below-market fixed interest rates that are typically the same as those offered by conventional lenders. Unlike other types of loans, there is no need to pay any points or fees upfront. Additionally, repayment terms can be up to 20 years depending on how much money you borrow. This makes it a great option for businesses needing long-term financing or looking to make large purchases like real estate.
One of the main benefits of an SBA 504 loan is that your business can receive up to 90% financing from approved lenders, making it much easier to afford big projects or purchases. You’ll also have access to low-interest rates and long repayment terms, allowing you to pay off your loan over a much longer period. Additionally, the SBA guarantees up to 85% of the loan amount, making it less risky for lenders who are willing to take on more risk.
While taking out an SBA 504 loan can be a great way to finance your business’s projects or purchases, there are some potential drawbacks that you should consider. For one, the SBA has strict eligibility and credit score requirements, which may make it difficult for some businesses to qualify. In addition, the process of applying for an SBA 504 loan can be complex and time-consuming, so you should make sure you are properly prepared before applying.
Ultimately, an SBA 504 loan can be a great financing option for small businesses looking to grow or make large purchases. By understanding the benefits and potential drawbacks of taking out this type of loan, you can decide if it is the right fit for your business. If you think an SBA 504 loan is right for you, do your research and contact an approved lender to start the application process. MAI Capital provides SBA 504 loans for a variety of purposes. Contact our team today to get the financing you need for your small business.