The financial benefits of an SBA loan include:
* Less Money - The commercial mortgage loan credit enhancement provided by the guarantee of the SBA can substantially reduce the amount of money required to be submitted for the purchase of a commercial property. Sometimes 100% financing for purchases, refinancing, renovation and construction of properties is available under the program 7a.
* Periods of longer amortization - An SBA loan allows a commercial repayment period longer than most conventional commercial lending, which lets you keep your mortgage payments and improve commercial low cash flow. Until 25 years commercial loans are available under the program 7a. The 504 Program is used a first commercial mortgage with a minimum term of 20 years and a second mortgage with 20 years at a fixed rate.
* No balloon payments - You will not be forced to refinance
its SBA loan business at any time.
Typical examples of an SBA loan borrower on the 7th are:
* A borrower who wants to buy a company with or without commercial real estate who do not want your loan is limited to the collateral value of hard.
* A borrower who wants to buy or build a commercial building and wants up to 90% of mortgage financing business.
* A borrower to buy or start a business with guarantees.
* A borrower who wants to fund most of the closing costs on the loan.
* A borrower who want a partner for acquisition or purchase of a professional practice and wants 100% financing
Purpose
The Small Business Administration (SBA) 504 loan program was created to help small and medium businesses to acquire the owners of commercial real estate without paying requirements of a traditional commercial mortgage loan. To qualify, 51% or more of the property must be held by borrowers of business if it is a purchase price of compromise. If this is a construction loan borrowers of business should occupy a minimum of 60% of the property. Part of the property does not have to be held in the name of the company or the borrower (s) individually. It is common for a holding company that was formed to take ownership of the property and then lease it back to the operating company. There are certain eligibility criteria at the 504 commercial mortgage loan programs:
The average company net income can not exceed $ 2.5 million after taxes for the previous two years.
The project envisages the size must be more than the personal, non-retirement, unencumbered liquid assets of the guarantors / directors.
Tangible net worth of the operating companies has $ 7.5 billion or less.
The loan of 504 requires a new job was created / retained for every 35,000 U.S. dollars provided by the CDC (Certified Development Company), unless the company complies with other public policy objectives
Passive investment companies, nonprofit corporations, lending institutions, commercial real estate development companies, and some other types of businesses are not eligible for 504 loans.
Structure
The format of the 504 commercial mortgage loans employs a traditional first mortgage from the private sector for 50 percent of the total project cost. The costs of the project includes the cost of land and existing buildings; hard construction, renovation costs, soft costs, and most commercial mortgage loan closing costs. The private lenders note is independent and carries its own pace, terms and conditions. A second mortgage of the CDC is used for a maximum of 40 per cent of project costs. Borrowers' own capital is the remaining 10 percent. If the property is special-purpose in nature or is a start-up business, borrower’s injection is increased to 15%. If the property is special-purpose in nature and is a start-up business, borrower’s injection is increased to 20%. The costs of the projects are funded in whole with the loan of 504 unlike the majority of commercial bank loans to finance only a minor percentage of the purchase price or value.. If the borrower decides to sell their property, these commercial mortgage loans are always assumed that the buyer meets the requirements under the SBA guidelines.
Less paperwork than you think!
The SBA has worked hard in recent years to reduce the amount of paperwork required to apply for this loan.
No fees are added.
It is true that rates are slightly higher for this type of commercial loan, but the fact that these loans are trading for 25 years eliminates the need to refinance, and therefore maintains the average cost of financing the commercial life of property to a minimum ..
The SBA commercial mortgage loan closes very quickly.
We can make a lot of SBA 504 loans in 60 days, which is roughly the same amount of time a traditional commercial loan if you're not in a hurry. However, the pre-approval from the norm for many specialized SBA lenders is becoming 24 to 48 hours, with commitments in four to five days.
Borrowers do not have to use your house as collateral.
Most of the 504 loans only to ensure the commercial property and / or equipment that is being financed. Most commercial mortgage lenders do not require something home as collateral.
Borrowers with imperfect credit histories can qualify for the SBA loan.
The 504 commercial mortgage loan programs are able to approve people with personal bankruptcy, as has happened more than 7 years ago.
