SBA 504 Loans
Oakridge Capital Advisors, an SBA 504 loan expert, may help you achieve extraordinary company success. Our experienced commercial finance staff is unmatched. We specialize in assisting businesses use SBA 504 loan options.
What is a CDC SBA 504 Loan?
US small businesses receive financial aid from the CDC/504 Loan Program. The SBA-administered program helps small firms buy big fixed assets like real estate and equipment.
These loans are provided by nonprofit “CDC” businesses in partnership with the Small Business Administration. Many small company owners use this program to fund big fixed asset investments without the higher interest rates and shorter payback terms of standard commercial loans.
Benefits of an SBA 504 Loans
SBA 504 loans offer many advantages for organizations seeking financing. Businesses can use these loans for long-term, fixed-rate funding. There are a number of benefits to SBA 504 loans that make them a strong financing option for companies.
Fixed-Rates
Businesses may take advantage of long-term, fixed-rate funding with these loans. Essential for companies planning their long-term financial strategy, this feature delivers stability and predictability in managing loan repayments.
Lower Down Payment
One major perk of SBA 504 loans is the reduced down payment that is required. The ability to get the financing needed for large investments in real estate or equipment while preserving important capital for operating purposes is how it helps firms. Finding this sweet spot might be challenging for companies who want to expand without going bankrupt.
Designed For Owner-Occupied Spaces
The Small Business Administration 504 loan program is tailored to companies who intend to invest in commercial real estate that will be used by the owners themselves. This emphasis allows companies to own the space they work out of, which can be a huge boon to any expanding firm, and therefore serves to promote stability and expansion in corporate operations.
Job Opportunities
These loans are a lifeline for the local economy, helping to spur growth and development. Jobs are created and community prosperity is enhanced via the acquisition of real estate and company development made possible by SBA 504 loans. This has a beneficial effect on the community at large in addition to the specific company.
Who is the CDC 504 Loan Program Best For?
SBA and CDC 504 loans allow small and medium-sized businesses to expand and build infrastructure. These loans are ideal for businesses that want to expand by buying land, erecting or modifying buildings, or buying heavy machinery.
Businesses with solid financial footing and an ambitious expansion strategy are the best bets for these loans since they show they can handle large amounts of debt over the long term. The programs are especially useful for businesses that want stable, long-term funding with a set interest rate so that they may plan their finances with more certainty.
This encompasses businesses that intend to live or work in the structure they are purchasing, as these loans are often extended to owner-occupied properties. Businesses with an eye toward expansion are the ideal borrowers for the SBA 504 and CDC 504 loans because of the good impact they may have on the local economy through the creation of employment or the improvement of community development.
Application and Approval for CDC 504 Loans
As part of the application process, businesses are required to provide thorough documentation and fulfill particular requirements in order to get an SBA 504 or CDC 504 loan granted. In broad strokes, these are the requirements:
Documentation
The number of workers or yearly income are two common ways in which the Small Business Administration (SBA) determines a company’s size.
Current Status
The company has to be up and running and making money.
Reliability
Having a solid credit history is essential. Lenders evaluate risk by looking at financial history and credit ratings.
Tax Returns
Most individual and corporate tax returns must be submitted within three years.
Property Ownership Need
In the case of preexisting structures, the firm must occupy a minimum of 51% of the property. In the case of new constructions, the need is 60% initially and 80% thereafter.
A Sizeable Down Payment
A down payment, often approximately 10% of the project cost (though this might vary by company type and project), is typically required for SBA 504 loans.
Financial Statements
Revenue statement, balance sheet, and revenue and expenditure estimates
Business Plan
A strong business plan must outline the loan’s intended use, expected impact on the company’s growth and stability, and other factors.
Collateral
The collateral is usually the financed asset, such as real estate or equipment. Whether collateral is needed depends on the loan size and risk assessment.
Good Government Standing
The company must have paid all applicable taxes (federal, state, and municipal) and must not have any outstanding government loans that are either delinquent or in default.
Job Creation
SBA 504 loans may involve the creation of jobs or development of communities to meet target employment or public policy goals.
Legal and Environmental Reviews
Real estate buyers must assess environmental effects. All laws must be followed for the property and loan.
Unique SBA 504 Loan Facilitation Skills of Oakridge Capital Advisors:
Oakridge Capital Advisors team members are SBA 504 loan experts. Our extensive guidance will help businesses apply for and maximize SBA 504 loans. Since every firm is distinct, Oakridge offers customized lending alternatives.
Our SBA 504 loan solutions are customized to each client’s business needs and goals, displaying our dedication to customer service. We match businesses with the best SBA 504 lenders through our extensive network.
The clients that we meet with get competitive terms and financing because of this access. Since SBA 504 loan applications are challenging and time-consuming, we prioritize simplifying and streamlining them.
To ensure a smooth and efficient process for our clients, we simplify, reduce paperwork, and speed up approvals.
Frequently Asked Questions
SBA 504 loans, which reach more, focus on real estate and long-term equipment finance. Certified Development Companies (CDC) 504 loans fund fixed asset purchases.
Businesses must meet specific size requirements, be in operation for profit, and intend to directly utilize the funded assets in their activities to qualify.
Land and buildings, new or renovated facilities, and large pieces of equipment are the usual uses for the funds provided by SBA 504 loans.
You may often choose a loan term of up to 20 years for property and up to 10 years for machinery and tools with these types of loans.
Collaborating with a CDC and a third-party lender, the application process for an SBA 504 loan includes financial assessments, business plans, and property appraisals.
Our committed staff is by your side through every stage of any facility expansion, real estate acquisition, or investment in large fixed assets. Learn more about the SBA 504 and CDC 504 loans and how they may benefit your company by getting in touch with us now.