SBA 504 Loans: The Ins and Outs of the SBA Program

Funding small businesses can be challenging. Many traditional loans have excessive stipulations that can make it difficult to qualify for a loan or line of credit. They can also entertain high interest rates and the ROI isn’t always worth the final cost of the loan. These problems can be offset by exploring the Small Business Administration’s (SBA’s) 504 loan program.

What is the 504 Loan Program?

The SBA 504 loan is designed to promote business growth for small businesses who operate for profit and who fit into certain parameters. It provides a viable option for business owners who want a loan that’s both fair and transparent.

Who Qualifies?

One of the best things about the SBA’s 504 loan program are the qualifying criteria. Eligibility is dependent on these factors:

  • The business can’t have a total net worth of more than $15-million
  • The business can’t have made more than $5-million per year for the last two-years
  • Your projected cash flow must show an ability to repay the loan according to the terms provided
  • You must agree to do business within the US or affiliated markets

Most small businesses who aren’t hugely in debt can qualify for the SBA’s 504 loan as long as they care for their credit and prepare a realistic and well-researched business plan. The business plan is key when applying for any type of small business loan. This predicts cash flow and shows projected growth.

How Can the Money be Used?

These funds can be applied to the following:

  • Land and building purchases
  • The purchase of equipment
  • To build or renovate facilities
  • To upgrade certain aspects of your facilities

There are also stipulations on the use of the money prohibiting it from paying for the following:

  • To purchase inventory or to be used as working cash flow
  • Debt consolidation
  • Rental purchases or investments

Making Smart Financial Decisions

Learning more about how to finance your small business is as easy as contacting Artemis Commercial Capital. Their professionals can advise you on the SBA’s 504 loan programs and help find the best financing option for your small business.

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