SBA 504 - Small Business Expansion Loans
The SBA 504 loan program offers small business owners affordable financing for buildings, machinery, and equipment. Working in cooperation with your bank, which provides a first mortgage for 50% of the project, Oregon Business Development will make a second mortgage loan for up to 40% of the project.
- Low Down Payment
With financing available for up to 90% of the project cost, SBA 504 loans offer a down payment as low as 10%. This allows the business owner to conserve cash for working capital and retain liquidity to meet operating needs.
- Long Term Financing
SBA 504 real estate loans provide 20-year, fixed rate, fully amortized financing on the CDC portion of the loan package. This enables the small business owner to pay for a facility over the long term, avoid risky loan call provisions, and enjoy lower monthly payments. For equipment-only projects, SBA 504 works just the same, except the term is 10 years.
- Attractive Interest Rates
The interest rate on the first mortgage will be attractive due to the bank's low loan-to-value position. The interest rate on the SBA 504 second mortgage is fixed for the life of the loan and is usually below the market rate.
- SBA 504 is a Flexible Program
SBA 504 loans can be used to finance the purchase of existing buildings, construction of new buildings, and most equipment, furnishings, and project soft costs. The program can be used by almost any small business, including new businesses (15% down payment required). Properties considered special use are also eligible with a 15% down payment.
- Ownership Options Tailored to Meet Your Needs
An entrepreneur can purchase and hold title to a building personally, in the name of the business or even set up a holding company for the real estate. This gives the small business owner the flexibility to maximize tax benefits of ownership and minimize liability in the manner best suited for the entrepreneur and his company. Additionally, two or more small businesses can receive an SBA 504 loan if they combine to create a real estate holding company. For instance, this option works especially well for professionals in the medical, veterinary, legal and accounting fields.