What is an SBA 504 loan?

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What is an SBA 504 loan?

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January 24, 2020

The SBA 504 loan is guaranteed by the SBA (Small Business Administration) with the purpose of helping small businesses grow. It is similar to an SBA 7(a) loan, just optimized for real estate. So if you are looking to purchase land, acquire new or used equipment, office renovations, or construct a new building from scratch, an SBA 504 may be a good fit. Given its track record for helping companies grow, the SBA 504 loan is also referred to as a Certified Development Company (CDC) loan.

To qualify, you need a sound business plan. In other words, it’s not as simple as “we think it would be great to open a new office closer to the hot spot in our city.” You’ll need to demonstrate how your plan relates to your business, and how your experience can help execute your business plan. Other requirements include your business having a tangible net worth under $7.5 million and an average net income below $2.5 million.

The terms and amount of your SBA 504 loan will depend on how you plan to use it. For instance, if you’re seeking the loan for land or real property, expect loan terms of up to 20 years. If you plan on purchasing new or used equipment or machinery, expect a 10-year term.

Using Bankroll to apply for an SBA 504 loan will be a quick and simple process. Your dedicated loan specialist will be happy to walk you through the process and answer any questions you may have.

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