SBA Loans (504)

If you’re planning to expand your small business or start a business, your best choice will be Small Business Administration Guaranteed Loans (SBA Loan). The Small Business Administration (SBA) is a federal department in the United States that offers assistance to entrepreneurs and small businesses. The SBA offers part of the loan with a government-backed guarantee and Shinhan Bank America currently participates as a member of the PLP (Preferred Lenders Programme). Within the PLP system, SBA transfers the final credit judgment and most power and responsibility for the operation and liquidation to borrowers of PLPs.

SBA 504 Loan Program (SBA Loan)

The SBA 504 Loan program is intended to provide funding for the purchase of fixed assets,which typically includes commercial real estate, houses, machinery or equipment at lower market rates. The 504 plan operates by dividing the loan between three parties, the business owner puts up at least 10% of the loan, the lender who puts up 50%, and the Certified Development Company (CDC) is responsible for the remaining 40%. Certified Development Companies are not-for-profit companies that operate to promote local economic development.

Total loan amount is $5 million.

In order to qualify for the SBA 504 loan program, the applicant must meet the following criteria:

• Within one year of purchase, the borrower must expect to use more than half (51 percent) of the property for its own operations.
• The majority of U.S. citizens or permanent residents will own the operating companies and the holding company.
• A company’s average net income can not exceed $5 million after tax for the preceding two years.
• The expected project size must exceed the personal, non-, unencumbered liquid assets of the guarantors / principals.
• A company can not have a tangible net worth of more than $15 million.

An SBA loan 504 program also provides long-term, with fixed-financing to help small businesses also expand. The loans can be handled jointly with commercial lending institutions through Accredited Construction Companies including SPEDCO.

In return for competitive long-term, and fixed-rate funding, the SBA also expects its beneficiaries of small business loans to continue expanding, developing, and maintaining jobs, thereby supporting the businesses and the communities around it. The SBA loans 504 program is a plan intended to promote economic growth for mainstream America!

What are Loans from SBA 504?

The SBA 504 loans, backed by the U.S. Small business management, provide long-term funding to buy real estate, supplies, and other fixed assets. There are three parties tied to a SBA 504 loan— the borrower, the creditor, and the accredited development firm (CDC) that has been approved by the SBA. SBA 504 loans offer 10 to 25 year terms, low interest rates and a down payment of 10 to 20 percent.

Often, moving the needle for your small business requires a big investment of resources. Perhaps there are special tools that could save you money on labor, making you more competitive. Next door may be a building that would make a perfect addition to your store. And, maybe the current facility needs a serious facelift.

In each of these situations, the perfect business finance option might be an SBA 504 loan. These business loans are used for buying real estate, supplies, and machinery for up to $20 million or more. Also, these loans may be used to remodel or upgrade existing buildings. 504 loans are very small enterprise-friendly, requiring just 10% to 20% down payment and providing 10 to 25 year terms and a low interest rate.

For Small Business Consumers

Borrowers putting up a low down-payment usually finance 10 percent of the cost of their projects, which protects business expansion work capital. Start-up businesses or specific purpose facilities would require greater equity.

Loan size

This is for a standard project of up to a maximum of $5 million, or the company is situated in rural areas, or especially if the owners also belong to a minority group, or if the business also needs to serve public policy functions. Manufacturing companies having different NAICS codes could get up to $5.5 million from SBA grants, as well as enterprises that meet other environmental and/or energy efficiency targets.

An interest rate which is fixed, helps decrease the cash flow pressure in an expansion cycle that most businesses are facing.

Ten, Twenty or Twenty Five year loan terms.

Maintain manageable and consistent monthly debt services, plus giving you the peace you need by ensuring that future repayments will not escalate.

The Money making America work

USA Funding Pros  is accredited by the SBA to process all 504 loans and also contribute to the community’s economic development. The U.S. government has established the SBA loans 504 program. The Small Business Administration (SBA), is charged to make long-term, lower fixed interest rate loans available to existing other small businesses including fixed asset funding needs and with lower down payment requirements.  At USA Funding Pros, we work to manage SBA loan 504 participation with business owners and bank loan officers.

Associated costs and terms

A processing fee for the SBA loan amount, is also financed by the SBA loan. A fee of the bank’s first Mortgage amount is collectable by the SBA after closing. Ongoing service fees totalling 64 percent of the total outstanding SBA loan balances, is included in the interest rate effective of the SBA loan 504. Also, the closing as well as legal Costs ($3,500) are the final responsibility of the loan from the SBA.  SBA loan 504 is an automatic take-out, and second loan funding program.