Commercial Real Estate Construction with the SBA 504 Loan
SBA 504 Construction Loans
The SBA 504 Loan offers many advantages to small businesses owners who are looking to construct, renovate, or expand their owner-occupied commercial real estate. Below are some of the most important ones:
- The SBA 504 loan allows small business owners to put less money down than with conventional financing. That allows entrepreneurial business owners to retain more of their capital for use in other parts of their business during the construction process.
- The SBA 504 loan allows for business owners to finance construction costs, closing costs, and soft costs, including architectural fees, engineering fees, surveys, title insurance, and more within the loan. This also allows business owners to retain more of their capital in hand for other expenses during the construction process.
- The SBA 504 loan offers below-market long term interest rates without balloon payments or call provisions. Smaller fixed monthly payments have less impact on cash flows.
- The SBA 504 loan allows for small business owners to build a larger facility than they currently need to occupy, as long as it satisfies the owner-occupied provisions of the SBA loan. They may then rent out that extra space and generate additional rental income to assist in meeting the monthly loan payments. And if they need that space later for their expanding business, they have it available for them.
There are more reasons that the SBA 504 loan is the smart choice for business owners who are looking to construct, renovate, or expand their business. You can read more on why we should be on your shortlist of small business construction lenders, and of course you can contact us with specific questions, or to discuss your, or your client’s specific project.