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SBA 504 and Green Commercial Building Loans
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   SBA 504: Small Business Loans for Commercial Real Estate 10% Down Commercial Property Financing
Stimulus: Economic Stimulus improves SBA 504 Loan rates, fees and availability The 504 Loan for Renewable, Green & Clean Energy Business SBA 504 Program now allows refinance of commercial building & property SBA 504 Fees significantly reduced by Economic Stimulus Package Stimulus creates awareness re: 504 loans for Veterans, Women & Minority Business Owners
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Commercial Mortgage Loans By Occupation, Type of Property or Borrower Type
The SBA 504 Loan Program is for Small and Mid-Sized Businesses98% of all U.S. Businesses fit the SBA's definition of a Small Business. If your business has a net worth of less than $8.5 million, net (after tax) income of under $3 million and you are considering purchasing, building, renovating or refinancing "owner occupied" commercial property than you absolutely need to consider the SBA 504 Loan - especially if you are considering building or remodeling using Solar Power or Renewable Energy.
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| A Comparison of The SBA 504 vs. Traditional Commercial Financing | |
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| Traditional Commercial Financing | SBA 504 |
| Availability: Maybe |
Available: Yes |
| Down Payment: 20 to 35% | Down Payment: 10 to 20% |
| Closing and Soft Costs: Paid Out of Pocket | Closing & Soft Costs: Most Rolled Into Loan |
| Term: Typically 3 or 5 years with a balloon or call and a 10 or 15 year amortization |
Term: 1st Mortgage: Fully Amortized over 25 years |
| Rates: Low Adjustable Rates | Rates: Low Fixed or Adjustable Rates for 1st mortgage, very low rate for fixed rate 2nd mortgage |
| Fees: Varies | Fees: SBA 504 Fees Temporarily Eliminated |
| Prepayment Penalty: Typical | Prepayment Penalty: Yes |
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SBA 504 Loan Program Requirements and Guidelines - more detailed information about 504 small business loans
Green SBA 504 - Commercial Loan for Green Building Construction or Renovation...or Renewable Energy Production (Solar, Wind, Biodiesel, etc.)
SBA 504 New Construction and Renovation Benefits
The 504 program offers excellent benefits for small and mid-sized business buying or refinancing commercial property, but the real beauty of the program is what it can do for you. For instance...
The 504 loan allows you to purchase property and finance the costs to:
- build
- renovate
- retrofit
- customize
- modernize
- remodel
- retool
- convert
In addition to the cost of the improvements you can also finance the closing costs and soft costs and if you are building on land that you already own you can use the land as equity for the transaction.
SBA 504 Loans by Property Type, Occupation or Type of Borrower
A huge number of property types, occupations and businesses are eligible for 504 financing including Attorneys, CPA's, Veterinarians, Manufacturing Facilities and Light Industrial Buildings and most "owner occupied" or "owner operated" businesses, so please contact us to see if you can qualify.
Below are some common applications (listed alphabetically) for the program and below is a link to ineligible businesses:
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SBA 504 Daycare & Childcare Center Financing - the 504 is ideal for the financing of day care centers and child care facilities. Let's say you own a child care or day care center business and there is a piece of property in your town that is in an ideal location, but the building or the property is not right for a day care center...well, the 504 can provide the financing to allow you to acquire and "reconstruct" or retrofit the property for the needs of your business and possibly at 90% loan to cost.
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SBA Dental, Orthodontic or Oral Surgery Practice Financing - the 504 is also an excellent choice for various types of dentistry practices. Dentists, Orthodontists and Oral Surgeons needing to build a new facility or expand an existing practice will benefit from the ability to finance their building and equipment long term.
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SBA 504 Hotel Financing and Motel Financing - these loans are still a great option for hotel and motel financing. Maybe you are considering financing the purchase of a hotel or motel and you found an existing hotel that is in the right location, but it needs a major renovation or facelift...and, let's say you want to build energy efficient or alternative-green energy elements like solar energy into the construction so your building will have less impact on the environment and so you can save money and take advantage of tax credits for going green...well, the 504 allows you to do just that.
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SBA 504 Physician Loans - SBA loan for Physicians, Doctors Offices and Expensive Medical Equipment. If you are a doctor looking to expand your medical practice and the subsequent increase in patients requires not only more space, but the addition of expensive medical equipment then a 504 loan should be a good option for you since it allows you to expand or retrofit an existing building to suit the needs of your practice or build a new facility.
- Preschool, Private School and Montessori School Construction - 10% Down SBA financing is available for preschool and private school construction, renovation, remodeling or refinancing. Pre-schools, montessori schools and private schools previously required more down, but this has been changed as a result of the ARRA - the American Recovery and Reinvestment Act. (Refinances will be available in June of '09).
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SBA 504 Loans for Veterans and Veteran Owned Businesses - the 504 is also a great option for veterans and veteran-owned businesses in need of commercial real estate financing with loans available up to $8 million and sometimes higher.
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Ineligible Businesses - Businesses that are not eligible for a 504 loan
SBA 504 Loans Are Available During the "Credit Crisis"
The many benefits of the SBA 504 loan make it hard to overlook when considering various types of commercial mortgage financing. It offers tremendous benefits for small and mid sized businesses. Perhaps the most obvious benefit is that...504 loans are actually available and have been throughout the credit crisis.
Call us toll free at 1-800-414-5285 to find out how an SBA 504 loan might benefit your business...or fill out a contact form by clicking the button below.
The SBA 504 - Major Benefits and Highlights of Owning Commercial Real Estate
1. The SBA 504 allows a down payment or equity of as little as 10%.
2. The 504 loan allows you to finance most closing costs and soft costs reducing out of pocket expenses to approximately 10% of the project cost and creating a near 90% loan to cost transaction.
3. The 504 loan enables you to build wealth in commercial property which can be a more secure long term strategy than other investments.
4. The SBA 504 is a commercial mortgage that is fully amortized over a long term with "below market" rates allowing for lower payments.
Once approved, there is no balloon, re-qualifying or refinancing necessary later. This saves you the future costs of a refinance and removes any anxiety about qualifying for a new loan at a later date.
5. The 504 enables you to own commercial real estate and take advantage of the significant tax breaks that come with ownership.
6. The SBA 504 Loan has always had low fees - even more so now with the passage of the Economic Stimulus and the Consumer and Business Lending Initiative.
7. The SBA 504 allows you do to a purchase and renovation of a commercial property in one loan which allows you to "retrofit" an existing property to your needs.
Larger SBA Loan Amounts
504 loans also allow increased loan amounts for the following types of small and mid sized businesses:
Green Energy Incentives of the SBA 504
1. New construction and existing buildings that incorporate Green construction into their buildings and facilities are now eligible for much larger SBA 504 loans if they meet the public policy goal of a 10% decrease in energy consumption. Any business eligible for a 504 loan that adheres to green energy policies can now take advantage of the excellent terms afforded by the 504 and the total cost of a green project could go as high as $9 million at approximately 90% loan to cost.
The use of Solar Panels alone could be enough to qualify a building for this benefit.
2. Small and mid-sized businesses generating renewable energy or renewable fuels such as Solar Power, BioMass, Hydropower, Ocean Thermal, GeoThermal and Wind can now obtain a commercial mortgage loan to finance the purchase or construction of commercial real estate.
And power generation does not have to be your primary business. Any business that is eligible for the 504 program can utilize this significant enhancement.
3. Larger 504 loans are also available to small and mid sized businesses that work with qualified architects and engineers in creating a "green building."
You must incorporate "sustainable design" in your facility as defined by the Leadership in Energy and Environmental Design (LEED) standards and the Green Building Certificate Institute.
*504 Loans are currently available up to $8MM and sometimes as high as $10 million for:
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A Manufacturing business in "multi-use" facility
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Any business that is able to reduce it's energy costs by 10% using various energy efficient measures
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Green or renewable energy and fuel producers
89% loan to cost transactions can currently go to $9,000,000 and 80% loan to cost transactions can go as high as $10MM.
SBA 504 Refinance and the Economic Stimulus - The Economic Stimulus and the American Recovery and Reinvestment Act have made an SBA or CDC 504 refinance possible. Details were announced earlier in the year and business owners may be able to start refinancing their properties in July of 2009. It is still not known exactly what the guidelines will be, but this legislation could help many small businesses access much needed capital by tapping the equity in their business properties. (Up until recently, 504 financing was only available for purchase, acquisition or new construction of commercial real estate).
Commercial Mortgage Articles - Small Business Real Estate: (coming soon)
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