SBA 504 Loans
Be a big fish.
Brickwell is one of Minnesota’s leading SBA 504 lenders. Period. With an SBA 504 loan, fiscally fit, small to medium-sized companies can enjoy access to the same type of long-term, fixed-rate financing enjoyed by larger firms—with interest rates equivalent to favorable bond market rates.
A typical 504 project is financed 50/40/10. Fifty percent of the project costs are financed through a senior private-sector lender or bank. Forty percent of the project costs are provided by an SBA Certified Development Company backed by a 100 percent SBA guaranty. The final 10 percent is an equity contribution form the company being helped.
Here are some general benefits of an SBA 504 loan:
1. Low down payment. In most cases, you’re required to contribute just 10 percent, which allows you to preserve cash for working capital.
2. Fixed rate on the SBA 504 portion. No need to worry about the prime lending rate going up. You’ll know the exact amount of your payments for 20 years.
3. Long term. Longer terms (10 to 20 years) mean lower monthly payments.
4. Low interest rate. Even with fees and closing costs included, SBA 504s offer a low rate for a subordinate mortgage loan.
Just starting out? Don’t give up hope just yet. An SBA 504 loan might be the answer, if you have:
1. Experience. Qualified management with industry-related work experience is critical.
2. A plan. Do you have a strong marketing strategy backed by solid market research data?
3. Capital. Make sure you have access to enough working capital.
4. Something to lose. When you’re vested in a business it shows. A minimum 15% equity contribution is key.
A 504 loan may be used for purchasing such fixed assets as land and improvements; construction of new facilities or renovation of existing facilities; or long-term machinery and equipment with a useful life of at least 10 years. Soft costs, such as legal and architectural fees, environmental studies, appraisals can be rolled into the loan. Ineligible costs include venture capital, refinancing or debt consolidation, working capital or vehicles.
Speak with a Brickwell Commercial Loan expert today to see if an SBA 504 is right for you.