Why New Business Owners Are Using SBA 504 Loans
If you’re a small business owner, you might have heard of something called SBA 504 loans and wondered what they are. You might also be curious as to why business owners seem to be flocking to this new type of loan. To determine whether you have the type of business that would likely benefit from a loan from the Small Business Administration, learn what a 504 loan is and why they are so popular with small business owners.
Laying the Groundwork
The very first thing you should know about 504 loans is that they are intended for businesses in need of real property, such as a building or land for economic development. One of the biggest hurdles of opening a small business is finding the perfect location to house that business, which is one reason 504 loans are so popular with small business owners across various industries. If you’re currently in need of a bit of financial help for your business or think you might be in the future, know that SBA 504 loans are not intended to be used for debt consolidation, working capital or real estate develop. Should you need funding for any of these commercial endeavors, you’ll have to look elsewhere for assistance.
A Stepping Stone
Another reason entrepreneurs have turned to 504 loans is because they were created for business owners who traditionally have a tough time putting themselves on equal footing with not only larger businesses, but other small businesses as well. Specific types of business owners who often find SBA 504 loans to be especially beneficial include veterans, minorities, women and business owners located in rural areas. Yet another reason for the popularity of 504 loans is that they can be used to improve the local economy.
Determine Your Eligibility
Now that you’re better informed of the popularity of 504 loans and what they’re used for, you might be curious as to whether your small business qualifies for such a loan. While a majority of the owners of small businesses find they do qualify for such a loan, those who do not are often lenders, companies that are involved in lending or speculative actions, and non-profit businesses. Additional qualifications include the business has to have a proven net worth of less than $15 million and an average net income that totals less than a flat $5 million after taxes for the last two years.
Get in touch with your local SBA office to determine whether your business fully qualifies for SBA 504 loans. The financing you need may be closer than you think.