Small Business Association (SBA) loans are some of the most competitive loans on the market. Although they come with several requirements and demand a much longer application process, there are several benefits associated with SBA 504 loans. Here are some of the biggest benefits associated with SBA 504 loans.
1. SBA 504 loans are less expensive than other lending options in every way. They are long-term loans, lasting between 10 and 25 years, require the least amount of money down, come with a fixed (and low) interest rate. The interest rate is beyond competitive in terms of long-term loans falling between 5.5% and 9.25% and has a monthly repayment schedule.
2. SBA 504 loans improve business cash flow. Due to the long-term nature of the loans and the low-interest rates, SBA loans come with low monthly payments that allow businesses to save their cash reserves for operational expenses or any other business needs or opportunities.
3. SBA 504 loans can finance up to 90% of your business’ project. Traditional loans, although they may offer a lower interest rate, only cover up to 80% of the total project’s cost (with a 20% down payment) and provide financing for shorter terms, typically 10 years which will come with higher monthly payments. SBA 504 loans only require a 10% down payment and with the longer term, lower monthly payments.
4. SBA 504 loans offer a high maximum of $5M on a maximum of a $12.5M project. Traditional loan maximums vary by industry and require industry-specific financing beyond $1M. SBA 504 loans allow you to borrow more and only use one lender.
5. SBA 504 loans come with their loan professionals. There are a lot of requirements and needs that have to be met to qualify for SBA loans and Certified Developmental Companies (CDC) were created to make sure that you meet those requirements. The CDC handles all of the paperwork for SBA loans which makes applying easier even though the process will be lengthy.
SBA 504 loans are wildly advantageous to have and if you can make it through the application process and get approved, it is the best business loan you can have as it’s backed by the SBA itself. Contact Revenue Park LLC to learn more about our SBA 504 loan program.