SBA 504 Loan Lower Down Payment: Pros & Cons

Are you considering buying new equipment or revamping your current business infrastructure but lacking funds? Well, then SBA 504 loan shall be your first choice. Due to the low-interest rates and down payment for SBA loans, it has gained much popularity in the business community.

Small Business Administration (SBA) funds small businesses by offering multiple loans. However, 504 is the best in SBA loans with minimal eligibility criteria, good loan amount, and longest down payment tenures. Despite having so many perks, there are still some cons to it. Here is everything you need to know about an SBA 504 Loan.

What is the SBA 504 Loan?

SBA 504 is a loan program designed to assist small businesses with long-term finances to grow their organizations. It provides loans for real estate allocation, equipment and machinery purchase, and upgrading existing real estate and other assets for business needs.

It's a three-party loan involving a lender, payer, and Certified Development Company (CDC). The lender covers a small part of the loan, and the CDC covers the rest.

Eligibility Requirements of Low Down Payment for SBA Loans

To become eligible for the loan, small businesses in the USA must fulfill the following easy SBA loan down payment requirements.

  • Your registered business must be a for-profit company.

  • It must reside under the United States territories.

  • The business's net worth shall be less than $15 million.

  • Your average income must be below $5 million after taxation for 2 years before making the application.

Pros of SBA 504 Loan Lower Down Payment

SBA 504 loan offers innumerable benefits. Some of them are given below.

Lower Interest Rates

SBA 504 loans come with the lowest interest rates in the financial market. Also, this interest rate remains fixed through the entire loan period.

Low Down Payment

This small business loan down payment requirement is pretty low. It requires the least amount of down payments. Where other programs charge up to 30%, SBA 504 sanctions loans at 10% down payments if met with necessary conditions.

Long Repayment Tenures

These loans provide payers with long repayment tenures. A small business owner can get 10 years for equipment-related loans and 20 to 25 years for real estate-based loans.

Cons of SBA 504 Loan Lower Down Payment

Now that you have got acquainted with the benefits let's go through the demerits of this small business loan.

Usage Restrictions

Small business owners and entrepreneurs can only use the loan amount for upgrading their infrastructure, assembling equipment, and buying real estate properties for business needs. Unlike other loans, the SBA 504 loan restricts the use of the amount as working capital.

Must Create New Jobs

The loan is for business purposes and must create new jobs in the process. The loan is not sanctioned for community or public works not covered under SBA 504 loan policies.

Get a Quick and Smooth 504 SBA Loan from 504 Capital Corporation

SBA 504 loan lower down payment can be a great option for start-ups and emerging businesses that have just started their ventures. Due to lower fixed rates and down payment for SBA loans, businesses can easily use this fund to leverage their operations and boost productivity. 

If you are looking for small business loans, 504 Capital Corporation can be a reliable service provider. We are one of the renounced certified development companies (CDC) with the sole purpose of providing the necessary financial aid to small business owners. Our loans require only 10% down payment and are available at a low fixed rate for flexible repayment periods. Also, our experts provide excellent help throughout the process, making it super easy to avail of. Thus, if we seem to be a good fit for your business loan needs, call us at 757-623-2691 or visit our website at https://504capital.com/.

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