Print Page   |   Contact Us   |   Your Cart   |   Sign In   |   Register
Community Search
Compare Loans
Share |

SBA 504 Loan 

7(a) Loan

Community Advantage

Conventional

Down Payment Usually 10% Usually 10-30% 10% - 30% 25% for real estate
Interest rate Fixed for 20 yrs with effective rate at approx. (currently ~5%) All in Typically variable, Max. Prime Rate (3.25%) + 2.25-2.75% based on term; + fees; 0.55% ongoing guaranty fee + 0.25%-3.75% on guaranteed portion of loan, based on loan amount; some fixed-rate options available Typically variable, some fixed-rate options available Typically 25-year amortizing fixed for 5 years in the mid 6% range
Length of Term
  • 20-year for real estate
  • 10-year for equipment
  • 10-year for lease hold improvements
  • Determined by industry type
  • Annual sales not to exceed range of $750,000 to $33.5 million for retail, service and agriculture
  • Number of employees not to exceed range of 100 to 1,000 for wholesale and manufacturing
  • Determined by industry type
  • Annual sales not to exceed range of $750,000 to $33.5 million for retail, service and agriculture
  • Number of employees not to exceed range of 100 to 1,000 for wholesale and manufacturing
Determined by lender
Loan Size $125,000-$5.5 million (Total project loan may be up to $13 million) Up to $5 million Up to $250,000 Determined by lender
Collateral
  • Generally, project assets being financed are used as collateral
  • Personal guaranties of the principal owners of 20% or more ownership are required, business guarantee
  • Subject assets acquired by loan proceeds
  • Pledge of personal residence unless bank can justify why unnecessary
  • Personal guaranties of the principal owners of 20% or more ownership are required
  • Subject assets acquired by loan proceeds
  • Pledge of personal residence unless bank can justify why not
  • Personal guaranties of the principal owners of 20% or more ownership are required
  • Generally, project assets being financed are used as collateral
  • Personal guaranties of the principal owners of 20% or more and business guarantee
Best Use Owner-occupied (at least 51%) real estate. Equipment finance. Short-term or long-term working capital and to purchase an existing business, refinance existing business debt, or purchase furniture, fixtures and supplies. Short-term or long-term working capital and to purchase an existing business, refinance existing business debt, or purchase furniture, fixtures and supplies. Real estate
Advantages
  1. 10% down!
  2. Lowest rates of any government guaranteed business loan
  3. Stretch debt over a long term to free up cash and working capital in the business
  4. Long-term debt improves credit picture to facilitate credit lines and other short-term loans if needed
  5. Diversify your business investment – real estate provides stability during economic instability
  6. Fees and closing costs can be financed in the package
  1. Short-term working capital
  2. Popular product with banks
  1. Product specifically designed for smaller businesses in underserved communities
  2. Can be paired with (REAL/504) loan
  1. Higher fees, rates may incent banks to lend
Disadvantages Limitations on use: owner occupied real estate, equipment and leasehold improvements
  1. Higher rates than REAL (504)
  2. Variable rates can rise
  3. Balloon payments can cause instability
  4. More expensive debt can impede the business long-term
Size limitation Much higher down payment reduces business liquidity
Extra Tip Ask the bank about the Real Estate Advantage (REAL or 504) Loan – otherwise they may not tell you about it. Visit www.nadco.org to find an SBA Certified Development Company (CDC) Expect rates to rise from recent historically low levels Only available through SBA Certified Development Companies (CDC). Visit www.nadco.org to find a CDC near you Do thorough price comparisons
more Calendar

1/1/2016 » 12/31/2016
NADCO Credit Risk Institute I: Introduction to Financial Statements

1/1/2016 » 12/31/2016
NADCO Liquidation Suite: Module 1 - The Liquidation Decision

VetLoan Advantage

Online Surveys


 ADDRESS CONTACT FORM
PHONE
WHO TO CONTACT
1725 Desales St. NW, Suite 504
Washington, DC 20036

CLICK HERE to submit a general inquiry to be forwarded to the appropriate individual on-staff.
(202) 349-0070

Ext.14 Claire O'Rourke
Ext. 16 Rhonda Pointon
Ext. 17 Denise Ripley
Ext. 18 Mandy Robertson
Ext. 19 Heather McNelis


View staff information
View Board information

Search for members/CDCs

View Congressional leadership information


Association Management Software Powered by YourMembership  ::  Legal