Small businesses are the backbone of the American economy, but many banks turn down or reject loans for small businesses. This makes the issue of small business lending one that has to evolve outside of the institution of a traditional bank. Luckily, the development of the SBA 504 loan is making it easier for small business loans to go to those who need them. Here are a few things to consider if you’re thinking about getting an SBA 504 loan for your small business.
What Will the Loan Be Used For?
There are specific qualifications for small business lending when it comes to SBA 504 loans. Your loan should be going towards purchasing existing buildings, purchasing land, funding land improvement projects, building new facilities, updating outdated facilities, or investing in long-term machinery. If you want to use the loan for any other aspect of your business, an SBA 504 loan may not be for you.
What is Your Company Net Worth?
In order for your company to qualify for an SBA 504 loan, the company must have a net worth of less than $15 million, and your annual earnings after taxes cannot exceed $55 million. If your company does not fall within this range, you cannot qualify for an SBA 504 loan.
How Much Do You Need to Borrow?
The most money you can borrow through an SBA loan is $5 million. If your project requires that you borrow more than $5 million, then an SBA will not be able to fully cover the cost, so make sure to take that into consideration.
Do You Have Adequate Collateral?
The collateral for an SBA 504 loan includes a personal guarantee of at least 20% of the loan amount. As a whole, though, the project itself is what is used as collateral for the loan.
If your business qualifies as a small business and the SBA 504 loan parameters are a match for the reason you want a loan, it’s time to start looking into the application process. An SBA 504 loan is the way to go for small business lending when you are looking for property and building updates, and here at Lewis and Clark Development group we would be more than happy to help you with the logistics of your SBA 504 loan in North Dakota.
Let Lewis & Clark Development Group’s Small Business Assistance Team Help You
Lewis & Clark Development Group’s Small Business Assistance Team can help you with your small business lending needs. Contact Tracy Whitney, LCD Group’s SBA 504 loan officer today, at (701) 667-7602 or at email@example.com.