Facts About SBA Loans You May Not Know

A Small Business Administration (SBA) loan often ends up serving as a lifeline for small businesses. These loans offer the lowest rates and payments and the longest terms available on the market. Funds can be used for a wide variety of functions, including advertising, operating capital, hiring staff, buying equipment or buying/refinancing a commercial property.


You may have been researching SBA lenders or small business loans in Maryland, North Carolina, and Virginia and still have questions about SBA loans. The most important takeaway should be that working with a reputable lender like 504 Capital Corporation is the best way to find a loan structure that’s the best fit for your business needs.

Here are some facts you might not be aware of:

  • SBA Loans Are Borrower Friendly
In fact, the SBA program was created specifically to provide small businesses across America with more flexible and favorable terms than conventional lending. The organization is dedicated to assisting borrowers who can’t find financing elsewhere.
  • The SBA Does Not Loan Money Directly to Small Businesses.
The SBA is not a lender in the traditional sense of the word. Instead, the organization partners with banks, credit unions, and other financial institutions to facilitate SBA loans. These loans are partially guaranteed by the SBA, which allows the lender to offer loans at advantageous terms to small businesses that they might not have been able to help previously. You can find out more here.
  • The SBA Loan Process Isn’t Slower Than That of Other Financial Applications
You may have imagined having to deal with a mountain of paperwork and lengthy delays if you apply for an SBA loan. But if you work with a Certified Development Company (CDC) like 504 Capital Corp, they’ll take care of most of the legwork.

SBA loans also don’t require any more financial documents than the norm. For the most part, whatever you’ll need to provide will match the paperwork required from any conventional lender or mortgage broker.
  • SBA Loans Aren’t Paid For By U.S. Taxpayers
Despite being a government agency, the SBA funds its own operations with the guarantee fee it collects from borrowers. Loans over $150,000 charge an extra guarantee fee that’s usually 2-3% of the loan amount. This means that the economy benefits from the funds generated by the thousands of small businesses that apply for low-rate SBA loans, without costing Americans a penny.

Surprising Facts Specific to the 504 Loan:

  • You Can Apply, Even if You’re Not an Established Business
That means startups are welcome, though they are required to put a larger amount down (15-20%), depending on what the funds will be used for.  However, if approved, a startup will have access to below-market interest rates as veteran businesses.
  • Most Types of Businesses are Eligible
Whether your industry is hospitality, retail, or manufacturing, chances are good that you’ll be approved if you apply for a 504 loan. Franchises can also apply to use funds in the same ways as other businesses, to update or expand their establishment or acquire new property.
  • Businesses May Use the Loan to Refinance Existing Debt.
If you’ve been in business for at least two years, are up to date on all payments within the last year, and have used a loan to acquire land, space, or equipment, you may apply to refinance. Because the refinancing program allows for the re-amortization of debt into a below-market interest rate loan and includes the option of a cash-out portion to cover short-term operating expenses, you’ll end up with a lower monthly payment and more money to reinvest in the business.

If you’d like to apply for an SBA loan, the first step is to find a reputable CDC like 504 Capital Corporation to help you with every step of the process. We take pride in being a nonprofit, SBA-certified lender that’s been administering SBA 504 small business loans in Virginia and providing small business loans in Maryland, and North Carolina for over three decades. We’ll work with you and a third-party lender to attain the most competitive fixed assets for your needs.

Contact us on (757) 623-2691 today. We’re eager to get started!

Location: 501 Independence Pkwy # 330, Chesapeake, VA 23320, USA

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