North Dakota offers plenty of opportunities for startup owners looking for a headquarters location. The state has more than 45 million acres of land but is home to only a little over 765,000 residents. Those numbers translate to roughly 50 acres of land per person, a statistic that appeals to entrepreneurs who want to purchase property, build or renovate a commercial structure, and hire eager workers in a picturesque, unspoiled landscape. This is where business loans such as an SBA 504 loan can come into play.
Getting a Deeper Understanding of the SBA 504 Loan
The Small Business Administration started the SBA 504 loan program as a way for companies to more quickly get their business dreams up and running. The fixed-rate SBA 504 loan works in conjunction with classic small business loans received from a financial lending institution.
Here is how a 504 works: In a typical situation, the lending institution provides 50% of the money, the SBA 504 loan provides 40%, and the borrower contributes the remaining 10%. This means if you are seeking small business loans to cover $500,000 in capital expenses, you will need to get a lender to loan you $250,000. If your needs meet SBA 504 loan requirements, you can receive up to $200,000, or 40% of the original $500,000, through the SBA. This leaves $50,000 for you to contribute from your own funds.
Who Is a Good Candidate for SBA 504 Loans?
Candidates for an SBA 504 loan in North Dakota must meet specific guidelines. For example, their net worth may not exceed $15 million, and they must operate a for-profit LLC, proprietorship, partnership, corporation, or LP. Other eligibility rules apply as well.
The good news is that many startups and existing small businesses in ND already fit candidacy expectations. Therefore, their owners may want to explore small business loans through lenders and the SBA for expansion, equipment purchases, professional fees, and other ventures and improvements.
Is the SBA 504 Loan Program Advantageous?
If an entrepreneur or company owner has a solid business plan and the means to fund at least 10% of capital costs, the SBA loan can make fiscal sense. Not only does it allow for faster ramp-up of operations and client services, but it can alleviate nagging cash flow.
At Lewis & Clark Development we are eager to answer any questions you may have regarding SBA 504 Loans in North Dakota. Please reach out to SBA 504 program officer Tracy Whitney today at firstname.lastname@example.org or (701) 667-7602.