4 Reasons an SBA 504 Loan is Right for Your Business
Renting property can be expensive, especially when rent rises due to market conditions. With property ownership, you can protect yourself against market fluctuations with a fixed-interest mortgage through an SBA 504 loan. With a mortgage, you’re also putting money back into your own pocket instead of the pocket of your landlord. Here are some advantages to the 504 loan program versus continuing to rent.
1. The Value of Equity
Owning property opens the doors to owning equity. As you make your mortgage payments each month, the paid off portion of your property increases. This opens the opportunity to borrow against your equity with a smaller loan during times of cash flow shortages. Equity offers a buffer against turbulent times, where as with rent there is no protection.
2. Fixed-Rates Offer Stability
An SBA loan can help you obtain ownership of the right property with a rate that will remain the same for the life of the mortgage. The benefit of a fixed-rate mortgage is the rate stays the same no matter what the current interest rate might be.
Without a fixed-rate, you could be looking at unpredictable mortgage payments that rise when interest rises. For a business that operates on a tight budget, this situation could be catastrophic. Knowing that your property payments will always be the same offers stability and peace of mind.
3. Low Down Payment
The 504 offers lower interest rates and a down payment as little as 10 percent. These loans can be used to purchase existing buildings or to construct a new one. You can also use it to purchase land or make renovations.
4. Simple Qualification
The Small Business Administration guarantees your loan to the bank. This makes getting prequalified for an SBA 504 loan is easy. You’ll need to provide your personal and business tax returns from the last three years, financial statements and projected financials.
Once you’ve turned in your documents, your mortgage loan could be approved in as little as a few days. Because they have nothing to lose, many banks offer loans through the SBA mortgage program, so finding a lender should also be easy.
There are many benefits to property ownership, and with the offer of low down payments and fixed-interest, there are even more benefits to securing that property through an SBA 504 loan. The longer you continue to pay rent, the more you’re letting money leave your business that you’ll never get back.