SBA program helps business owners buy their own buildings

With the Nevada economy gaining consistent momentum, there has never been a better time for small business owners to invest in their future by purchasing their headquarters.

Buying their office building allows business owners to grow their companies, build equity and take control of the future of their business.

By utilizing an SBA 504 loan, business owners can buy their property with a down payment of 10 percent and an interest rate that remains low.

The difference in the economic outlook now and what we experienced when we went through the recession is night and day. Right now, the demand in many places in Las Vegas and elsewhere in Nevada is higher than the existing supply of available buildings.

We have gone from a situation not too long ago in which some properties were sitting vacant, to seeing plenty of instances where business owners know exactly what they want in a property and are ready to move on it. This dynamic is driving strong demand for commercial buildings.

As of late April, the monthly interest rate on an SBA 504 loan through Nevada State DevelopmentCorp. stood at 5.029 percent based on a 20-year fixed term and 10 percent down.

The standard behind the SBA 504 program is 10 percent down. We find that most small businesses can come up with that.

To illustrate the power of an SBA 504 loan, consider a typical small business that may be paying $2,400 a month in rent but looking to purchase a $500,000 building to serve as company headquarters. In that case, the business could own its own half-million-dollar building by coming up with a $50,000 down payment and taking on monthly payments in the range of $2,500 to $3,000.

Even better, now appraisal levels are starting to increase. We’re seeing a lot of appreciation in the past several years, and we expect that trend to continue.

Last year, NSDC approved approximately 60 loans for about $50 million. NSDC does 40 percent of the financing.

This is precisely why the SBA 504 program was designed. The Small Business Administration set it up with the goal of allowing small businesses to expand with minimal outlay, which serves to create jobs and stimulate economic growth. We are certainly seeing this happen right now in Nevada.

Evan Dickson is the president of Nevada State Development Corp., a nonprofit company that is a large SBA 504 loan provider in Nevada. It has offices in Las Vegas and Reno.

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