Small Business Owner’s Manual: SBA 504 Loans

If you own or operate a small business, you may be researching financing options such as SBA 504 loans. You might not always have liquid funds available to purchase the real estate or equipment you need to expand and improve your company. Fortunately, the right loan should be able to help. The SBA 504 loan variety is generally intended for small businesses that need to acquire tangible assets, such as machinery, in order to grow or modernize operations. Before you pursue such a loan, there are a few basic facts you should know.


Loan Purposes


You will probably find that there are multiple varieties of SBA loans available. For many small business owners, these loans are the best way to acquire long-term financing for operations, equipment and more. In general, SBA loans are fixed-rate, which may help protect your company’s financial viability in the future. Before choosing your loan type, you will need to determine your unique situation and needs. If you require new real estate to accommodate company expansion, an SBA 504 loan may be right for you. This financing is generally provided with the intent of fostering economic growth within a community. If you own a thriving local business, you may be an excellent candidate for such a loan.


Eligibility Details


Once you have decided SBA 504 loans sound right for your situation, you will need to research eligibility details. There are some standards you may have to meet if you are to qualify. Often, nonprofit businesses are not eligible for this type of financing. To be approved for an SBA 504 loan, your small business also may need to meet certain requirements in the areas of net worth and net income. If you are uncertain whether your business is likely to be eligible for this type of financing, consider directly contacting a lender to discuss your situation.


Potential Restrictions


In addition to eligibility requirements, there also might be certain restrictions on how your SBA 504 loan can be used. These loans might not be approved for use on certain types of real estate. If you want to invest in rental properties, for example, a different type of financing would probably work better for your situation.


If you are thinking about applying for SBA 504 loans, you may need to do some research and consider your situation beforehand. These loans are generally intended for small companies that plan to purchase things such as machinery and real estate to be used in expansion and business growth. To be eligible, your business may need to meet certain income requirements.


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