It isn’t always easy as a small business owner to find fixed interest rate loans with payments you can afford. The Small Business Administration (SBA) recognizes this, which is one reason it offers the SBA 504 Loan. We outline several benefits of this loan below.
A Fixed Rate and 25-Year Term
If you plan to purchase a building on behalf of your business, you will need a loan that’s nearly as long as your mortgage. With a 25-year term and an interest rate that never changes, the SBA 504 Loan fits the bill. Because the SBA sets the loan up as fully amortized, you won’t have to worry about such things as a large balloon payment due towards the end of the loan term. This enables you to keep the costs of monthly occupancy stable so you can focus your energy on business growth.
Down Payment Requirements for the SBA 504 Loan
Saving for a down payment on a large real estate loan can take years. Fortunately, the SBA requires only a 10 percent down payment for this type of loan. You may or may not need to pledge collateral, depending on your credit rating and other individual factors. This low down payment requirement is a huge benefit because it allows you to hold onto more capital for the purpose of expanding your business.
Uses for the Loan
The flexibility this loan offers is another one of its excellent benefits. You can receive funds from the SBA 504 Loan for a variety of purposes, including:
- Building construction
- Building improvement, upgrades, or renovation
- Purchase of buildings or land
- Purchase of used equipment expected to last at least 10 years
- Refinancing of traditional debt
We realize applying for this loan and gathering documents can seem overwhelming if you have never done so in the past. Please contact Norus Capital today to request an appointment where we can help prepare you for success.