5 Ways an SBA 504 Loan Could Benefit Your Small Business

When it comes to getting a loan for your small business, there are many options. You might have heard about the SBA 504 Loan program explicitly created to support the small business industry. These loans can be used for fixed assets that grow your business and create jobs. This program offers enticing benefits for your financial needs, and we’re here to help you discover if this loan might be right for you. Here are five reasons you should look into an SBA 504 loan.

1. Fixed Rates

SBA 504 rates are fixed for the life of the loan and are not subject to pricing adjustments or reviews where they could potentially change. SBA 504 loan financing allows business owners security in knowing that their rates will not rise or fall over the years, giving you the freedom to plan for the future of your business. 

2. Long-term Loans

Since an SBA 504 loan is a long-term, fixed-rate loan, it can provide stability for small businesses already facing unknown day-to-day impacts. With terms of 10 and 20 years and no balloon payments, small business owners can pay for a facility over a longer period while avoiding risky loan call provisions typically required by traditional lenders. 

3. Borrow More Money with a Lower Down Payment

As a business owner, you know the importance of liquidity. With financing available for up to 90 percent of project cost, the 504 loan offers a 10 percent down payment compared to a higher percent through conventional bank financing. Your business can conserve working capital.

4. Below Market Interest Rates

Because this is a government program, these loans can offer lower interest rates than the average commercial loan. Even though the rates might rise and fall in the same trends as other interest rates, their interest is typically lower overall, which means that you are paying less for your loan over time. 

5. Fees and Closing Costs can be Financed in the Package

Often, loan fees or closing costs can be financed in your loan package, allowing for greater cash flow stability or the opportunity to improve your business sooner. 


If you’d like to see if an SBA 504 loan is right for you, get in touch with a member of our business banking team today! 

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