Impact on Real Estate and Equipment by CDC/504 Loan Program in Maryland

If you are a small business owner, you may have many ideas to expand your business. But how to get funds for it?

You may be thinking of availing loans from a commercial bank, but they are not flexible and can cause cash flow issues for your business.

So, what can you do?

Well, you can apply for SBA 504 loans.

Why?

SBA 504 loans are backed by the US Government and as SBA stands for Small Business Administration, they are designed to help small business owners specifically.

What Are SBA 504 Loans?

SBA 504 Loan is a government-supported loan for small businesses. It helps new and growing businesses acquire finance to expand, make capital improvements, and much more.

These loans are issued by a Certified Development Company (CDC) and are overseen, authorized, and regulated by the SBA.

But, can an SBA 504 loan be used to buy real estate?

The answer is - Yes!

504 Capital Corporation is an SBA lender in Maryland and we let you buy real estate with SBA 504 loans.

But there’s a requirement to get an SBA loan to purchase real estate - the property or building must be owner-occupied. However, if you want to generate an additional stream of income through rent, it is possible.

How?

If you are purchasing an existing building, your business must occupy at least 50% of the available space.

So, if you purchase a building, there is nothing preventing you from taking up at least 50% of the building and then leasing the remaining to another company. Or dividing it up into smaller sections and renting those to various companies.

And what if you are purchasing land and having a building constructed?

In this situation, the SBA requires that your business occupies 60% of the new building. That leaves 40% of the building for other purposes, including renting or leasing.

Thus, SBA 504 loans become a perfect fit for small business owners who want funds for long-term and at a low rate of interest to buy real estate.

This has created a huge impact by SBA lenders in Maryland on Real Estate and Equipment.

1. “Why rent when you can own?” approach: SBA 504 loans have allowed business owners to occupy property or buildings for which they usually paid rent. This has motivated the approach of “Why rent when you can buy” in the small business owners.
2. Gain stability and peace of mind: Since SBA 504 loans have low rates of interest, small business owners can buy real estate with ease. So they get relief from paying increasing rents regularly and they know they will never get priced out of their building.
3. Additional income: When small business owners buy an existing building, they can occupy at least 50% of it for their business and rent the remaining. And, in case of a new building they can provide 40% of the building on rent or lease. So, they get additional income which you can further be invested in the business.

This promotes buying real estate with the use of SBA 504 loans.

SBA Lenders in Maryland

504 Capital Corporation is a leading Certified Development Company(CDC) in Maryland. We help small businesses and promote economic development with our lending facility. As SBA lenders in Maryland, we are skilled and dedicated to offer the best services.

To learn more about SBA 504 loans, call us today at 240-638-2713.