Commercial Real Estate Loans: SBA 504 Loans Vs. Traditional Loans

Purchasing property for your business or fixed assets that make your business more profitable is an investment into your business’s future. But your future profitability depends on your current ability to pay a loan. With a number of different loan options available, it can be difficult to choose which ones works best for you. Thankfully, with the help of 504 Capital, you can have all the information you need to make an informed decision.


Commercial Real Estate Loans

As a business owner, you may be looking to increase your assets. One of the best ways businesses can increase their assets is by investing in commercial real estate. There are many benefits of owning your commercial real estate space, including opportunities for equity appreciation, an increase in cash flow, and tax advantages. To purchase commercial real estate, there are a variety of different loan options available. Two of the most common and popular options are traditional loans and SBA 504 loans.

SBA 504 Real Estate Loans

An SBA 504 real estate loan is a loan provided by a certified development corporation (CDC) and backed by the Small Business Administration (SBA). 504 loans from the SBA can be used in several commercial real estate transactions involving fixed assets or improvements to existing assets. This loan program is designed to help small businesses grow and provide new job opportunities. 


Businesses interested in a 504 loan can use it to purchase:


  • Buildings 

  • Land

  • Land improvements (creating parking lots, landscaping, and driveways)

  • Construction/Renovation

  • Long-term machinery and equipment 

  • Refinancing debt from construction or building projects


For many small businesses, an SBA 504 loan is a beneficial alternative to a traditional loan because of its low-interest rates, longer finance terms, and small down payment requirements. Most CDCs offer 504 loans with:


  • A10% down-payment

  • Low, fixed interest rate

  • 10, 20, or 25-year terms

Traditional Loans

Traditional loans are also an option that many small businesses explore. These loans are provided by a traditional lender such as a bank or a credit union. In contrast to a 504 loan, traditional loans provide borrowers with:


  • Short loan periods

  • Low-interest rates (subject to economic conditions)

  • 20% down payment requirements


Because of these differences, some small businesses have difficulty qualifying for and making payments on a traditional loan. So, while there are multiple loan options available, SBA 504 loans tend to be more beneficial for the borrower.

504 Capital—Offering Commercial Real Estate Financing in Maryland, Virginia, and North Carolina

Are you ready to take your business to the next level? A commercial real estate loan in North Carolina, Maryland, or Virginia can help you do that. As a CDC serving the region, 504 Capital has the knowledge and expertise to help you make your business more profitable. We provide SBA 504 real estate loans in Virginia, Maryland, and North Carolina to help businesses grow and flourish. 


Discover how an SBA CDC 504 loan can help grow your business today! Contact us now at (757) 623-2691.

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