SBA 504 loan adds ease to commercial real estate purchase

Every business needs a home, and deciding to own a space can make a huge difference in the success of the organization. Owning your space stabilizes your occupancy costs, allows you to think long term, and serves as an excellent retirement vehicle down the road.

Many business owners shy away from buying their own real estate due to fear of unknown costs. After all, real estate is notoriously costly. That’s why I want to discuss the Small Business Administration’s (SBA) 504 Program, which makes the process affordable and streamlined for business transactions.

Designed to provide financing for the purchase of commercial real estate for businesses, the SBA 504 loan program is one of the most effective means of feasible growth available. Requiring as little as 10 percent down payment from the borrower, the program drastically strengthens the purchasing power of businesses by dispersing the remainder of the loan across two additional entities: a conventional lender and a certified development company (CDC), which administers the loan on behalf of the SBA.

The SBA 504 loan provides funding for the purchase of fixed assets, including real estate, machinery and equipment. It also can be used for construction and renovations, allowing owners to improve their real estate at below-market rates.

In our current rising-rate environment, locking in low rates can make monumental long-term differences. This is why the program’s most important aspect, perhaps, is its below-market, long-term fixed interest rate. Through an SBA 504 loan, businesses can simply avoid future balloon payments and unexpected rate increases.

Don’t let the “Small Business” moniker of the SBA make you hesitant. With the SBA defining its beneficiaries based on net worth and profit, the majority of privately owned, for-profit businesses qualify.

The SBA 504 loan program is simple to navigate, with your CDC walking with you side-by-side throughout the process. The loan requires only three completed forms for prequalification, and effective CDCs can prequalify a business in just a few days. At TMC Financing, for instance, we generally complete prequalifications within 48 hours.

One of the largest CDCs providing SBA 504 commercial real estate financing in Southern Nevada, TMC Financing is a partner of much of the development currently happening throughout the Las Vegas Valley. Since our founding more than 35 years ago, our company has helped fund more than 5,000 projects, with a lifetime total value of more than $9 billion.

The SBA is actively interested in funding projects of all types and sizes. Whether you want to ditch the unstable occupancy costs that come with leasing or you’re looking to acquire new land for an exciting new development project, consider the SBA 504 loan program as an option to bring your vision to fruition.

Chris Hunter is senior vice president of business development for TMC Financing in Nevada. With over 18 years of experience in the industry, Chris is an expert in 504 financing.

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