As an SBA 504 lender in Virginia, our team at 504 Capital Corporation has helped a number of small businesses grow and become successful. Owning your business property and land is a big step towards financial independence. In order to take that step, you need to know what lies ahead. So, we have compiled a list of the different options for commercial real estate loans in Virginia, Maryland, and North Carolina.
Get to Know your Options for Commercial Real Estate Loans
There are quite a few options when it comes to choosing a commercial real estate loan in Virginia, Maryland, or North Carolina. However, the three main ones are alternative loans, conventional loans, and SBA loans. Alternative loans are provided through lenders online, venture capitalist loans, crowdfunding, grants, etc. Conventional loans are the most common and come from banks or credit unions. Finally, Small Business Administration (SBA) loans are loans provided by Certified Development Corporations that are backed by the government.
Conventional Loans vs Small Business Administration Loans
While conventional loans are the most popular, they are not always the best option for businesses. In most cases conventional loans offer:
- Low-interest rates
- Fast approval times
- Short loan periods
For some businesses, the expediency with which you can get a conventional loan is a big selling point. However, these loans are subject to influence from the economic environment, and in poor conditions, they can result in balloon payments.
In contrast, an SBA loan offers:
- Low-interest rates
- Long loan periods
- Less up-front cost/collateral
In almost all cases, SBA loans are more beneficial for the borrower.
SBA Loan for Commercial Real Estate
Now that you understand the many options available for a commercial real estate loan in Maryland, Virginia, and North Carolina, let’s discuss the main SBA option. If you are just looking to purchase commercial real estate the 504 loan is the best option because it significantly reduces the up-front expenses.
As we mentioned before, there are a few main benefits of using an SBA loan instead of a commercial or private loan. They are the low-interest rates, long loan periods, and reduced up-front cost/collateral. With a 504c loan, the loan period is up to 25 years compared to the 10-year loan period of a conventional loan. Similarly, most conventional loans require 20-40% of the total cost as a down payment. In contrast, the 504c loan only requires 10%. As a result, the 504 loan is more favorable for small business owners.
The 504c loan offers a range of purchase abilities, including:
- Real estate (buildings or land)
- Improvements to land or buildings
- Construction/renovation costs
- Other fixed assets
In addition, 504c loans only require as little as 10% down payment on the purchase. So, if you are looking to purchase a building, a 504c loan would be the best option.
SBA 504 Lenders in Virginia—504 Capital
Do you need a commercial real estate loan in Virginia, North Carolina, or Maryland? The team at 504 Capital has you covered. Our loan officers work with you throughout the loan application and approval process. We believe that small business owners make the world go round, so we care about each and every customer that walks through our doors. We want your business to succeed, so we set you up for success.