Why Use SBA 504 Loans if your Company Needs Funding?
While not all companies would be considered eligible for SBA 504 loans, those companies which are eligible can get a huge boost with one of these loans. These kinds of loans are aimed specifically at small companies involved in economic development, but they do exclude many other traditional reasons for applying for a loan.
For instance, SBA 504 loans cannot be used for purchasing inventory, developing real estate, consolidating your debts, or even for use as working capital. These loans are made available only to companies which are involved with improving the local economy, or helping out other businesses owned by minorities and women.
Advantages of SBA 504 loans
If your company is one that is willing to work with a Certified Development Company (CDC), obtaining an SBA 504 loan can be very helpful in establishing and growing your business. For instance you could use such a loan to purchase an existing building where your business would be housed, or you could completely renovate a building to make it suitable for business. You can also construct an entirely new facility from which to base your operations.
Another approved usage of such a loan would be to purchase land and develop it for your business, or to acquire equipment that would be needed for the operation of your business. You can even refinance debt which would be related to the purchase of that equipment, or to the renovation of a facility you will be using for operations.
Benefit to the community
Because SBA 504 loans are set up to be administered via Certified Development Companies (nonprofits whose objective is developing a community), any such loan obtained by a business will be a long-term benefit to the local community. In fact, some of the most common uses for SBA 504 loans are fixed-rate financing on assets such as buildings or land, both of which will contribute strongly toward community improvement and growth.