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Which SBA Loan is Right For You?
SBA 7(A) Loan
The 7(a) Loan Guaranty Program is one of SBA's primary lending options. It provides loans to expanding small businesses. But small is an understatement. For example, businesses can have as much as $7 million in net worth or up to 1,500 employees.
| Loan Amount: | Up to $2 million | ||||||||
| Repayment Terms: |
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504 CDC Program
| Loan Amount: | Up to $5 million |
| Repayment Terms: | Up to 20 years |
What exactly is an SBA 504 Loan?
These loans, sponsored by the United States Small Business Administration, provide long-term, financing to small businesses who are buying real estate, building an office or purchasing equipment for expansion or modernization.
What exactly can I do with a 504 Loan?
Proceeds from 504 Loans are only to be used for fixed asset projects such as: purchasing land, making improvements, including existing buildings, grading, street improvements, utilities, parking lots, and landscaping; construction of new facilities, or modernizing , renovating or converting existing facilities; or purchasing long-term machinery and equipment. You cannot use a 504 loan for working capital or inventory, consolidating or repaying debt, or refinancing.
How much can I borrow with a 504 Loan?
Your loan limits will vary according to your business. A 504 loan structure is actually a combination of two loans: A bank first lien loan and an SBA second lien. There is no size restriction on the first lien. The SBA second lien is limited to $1.5 million, except on a minority owned business, which has a $2 million limit.
What kind of business qualifies for an SBA 504 Loan?
To be eligible, the business must be operated for profit and fall within the size standards set by the SBA, which identifies a small business as one that does not have a tangible net worth in excess of $7 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years.
What kind of terms do 504 Loans come with?
Interest rates on 504 Loans are based on the current market rate for five-year and 10-year U.S. Treasury issues. Generally, a 504 Loan interest rate is 3 to 3.5% above the current Treasury rate. The SBA portion of the loan is a fixed rate on a 10 to 20-year note. The bank-backed portion of the loan is usually set for five-year increments and can be fixed or floating.
ViewPoint Bank is a certified SBA Lender and has helped dozens of businesses finance their growth through the SBA 504 Loan Program. We can help you too. Just call ViewPoint Bank's business lending department at 972-801-5775.