Is your business looking to expand and considering using a construction loan? Why not apply for an SBA 504 construction loan? These loans are highly sought after and favorable to the lender—providing you with low-interest rates, extended payment periods, and flexibility. At 504 Capital, we have helped various businesses expand their space through SBA construction loans. To assist other businesses, we wanted to put together a little blog that explains how these loans work and why you should choose one. Determine if a 504 construction loan is right for you.
How SBA 504 Construction Loans Work
Many businesses, at one point or another, consider purchasing a building or constructing a building for their business operations. However, building a commercial space can seem daunting and unachievable for many businesses that don’t have a lot of capital. Thankfully, there are still options for these businesses. One of the many options available is an SBA 504 Construction Loan. These loans are offered by Certified Development Corporations (CDCs) and backed by the Small Business Administration (SBA). This setup allows businesses to find preferable lending terms and agreements that help them grow and establish their business.
Benefits of Using an SBA 504 Loan
Small businesses looking to expand by constructing business space will find the terms of an SBA 504 construction loan to be the most desirable. In addition, businesses can put less money down and benefit from longer payment periods.
Flexibility of the Loan
The SBA 504 construction loan allows the borrower to finance a wide range of business expenses, including construction costs, closing costs, architectural fees, engineering fees, surveys, title insurance, and more. In addition to the construction costs, businesses can finance projects to increase property value, such as adding a parking lot, connecting your facility to utilities, and landscaping.
Put Less Money Down
In contrast to a traditional business construction loan, the SBA 504 loan only requires 10% down compared to the 20-30% that is typically required. This reduced down payment ensures businesses have operating capital to sustain them while construction is underway.
Long-Term Payment Periods
In addition to requiring a smaller down payment, 504 loans generally have a much longer payment period. SBA 504 loans have more extended payment periods at 25 years versus the traditional 10 years.
North Carolina, Maryland, and Virginia Construction Loan Lenders
504 Capital is a Certified Development Corporation offering construction loans in North Carolina, Maryland, and Virginia. Our experienced lending specialists will work with you to meet SBA qualifications, apply, and get approved. With our help, numerous businesses across the states we serve have expanded their workspace and made beneficial business moves. Interested in working with us?