The small business owners who are thinking of buying or renovating commercial properties or even buying devices for business expansion should consider acquiring 504 loan offered by the US Small Business Administration. This type of loan offers the startup businesses to gain the privilege of acquiring the similar type of fixed rates and long term funding enjoyed by the popular firms. This particular loan program offered by SBA considers a company as small if its net profit after tax reduction is less than two million dollars. All types of startup real estate companies are eligible for this type of financial support provided by the Small Business Administration.
This type of loan is used to buy different types of assets such as commercial buildings, modern shopping buildings, parking centers as well as renovating the existing buildings and so on. Many businesses also acquire this kind of fund to buy machines or even to renovate machines that are bought within a time span of eight years. Other types of financing covered up by this loan program include charges on construction, interests and other expenses associated with commercial building construction and maintenance.
The low down payment is another reason of huge popularity of SBA 504 fund among the borrowers. It is possible for the small business to get an upfront price reduction of nearly 100,000 dollars on a single project of nearly one million dollars. Plus, the loan maturity of ten or even twenty years are offered to the people and the fixed interest rates are set for the entire loan life.
It is important to remember that SBA does not offer the loan directly to the borrowers. In fact the organization enters into partnership to provide cash to different money lending firms, community development agencies as well as micro-lending companies. Moreover the SBA takes the responsibility of deciding the terms and condition as well as regulating these funds. Here are a few benefits that you can get from SBA 504 loan agreement.
Reduced down payment
In several cases, the small business is required to pay nearly ten percent of the total cost of the business project that includes renovation cost as well as other charges. This type of low down payment also allows the small business to save money for capital investment. Normally, the bank asks for twenty or thirty percent of this type of payment on purchase cost.
Fixed interest rate
The small businesses are not worried about the huge lending rate and they also have the privilege of measuring the accurate amount of mortgage payments for at least fifteen to twenty years.
Long term loan
The loan term for this type of fund is ten or twenty years. Plus, it also facilitates the borrower to repay the loan on a monthly basis.
Low rate of interest
Another important feature of this type of fund is that it offers a low and fixed interest rate for a mortgage loan. Such kind of feature enables a startup company to make use of this fund without any difficulty.