Find Out If You Are Eligible For An SBA 504 Loan
You may be surprised to learn that small businesses account for more than 99% of all businesses in the United States. According to the latest statistics from the Small Business Administration (SBA), there are nearly 60 million small business employees nationwide who create about 1.5 million jobs annually.
Whether your entrepreneurial endeavor is a start-up or existing company, having a small business helps the US economy by offering job opportunities and contributing to overall growth. Being considered “small” also makes a business eligible for certain grants and government-funded loans like the SBA 504 loan.
But how do you determine if you qualify as a small business? Figuring out if you meet the key criteria is a crucial first step, and it’s important to note that a small business can actually be much larger than what many people imagine when they think of a more modest company.
To be considered a small business, and therefore eligible for an SBA 504 loan, you must own a small business as defined by the SBA and meet the following qualifications:
- Company average net income of less than $5 million after taxes for the previous 2 years
- Tangible net worth less than $15 million
Loans also cannot be made to businesses engaged in nonprofit, passive or speculative activities. For additional information on eligibility criteria and loan application requirements, small businesses and lenders are encouraged to contact a Certified Development Company (CDC) in their area like 504 Capital Corporation. If you live in Virginia, D.C., Maryland, West Virginia or North Carolina, 504 Capital can help you figure out if you are eligible for the SBA 504 loan and discuss more of its great benefits such as:
- Generous term lengths. In 2018, a 25-year fixed term was added to the financing options along with 10- and 20-year loans.
- Lower interest rates than business loans funded by traditional financial institutions. As of July 2020, SBA 504 loan interest rates were set at 2.41% for a 25-year fixed-rate, 2.34% for a 20-year fixed-rate, and 2.39% for a 10-year fixed rate. Of course, those rates will fluctuate, but experts agree they aren’t likely to rise any time soon.
- Financing for up to 80 to 90 percent of project costs.
- Minimal down payments. In most cases, the borrower is required to invest only 10 percent of the total project cost, which includes renovations and soft costs. This allows the business to preserve cash for working capital.
If you qualify as a small business, consider taking advantage of the benefits of an SBA 504 loan. 504 Capital Corporation is a top SBA 504 lender that has loaned more than $250 million to small business owners. If you have questions or would like to learn more, give us a call or visit 504Capital.com today.