SBA 504 Loans
SBA 504 loans are generally used for long-term machinery or equipment loan purchases as well as real estate purposes. This is one of the lesser known loans compared to the other SBA loans. Besides, it has a different structure. Note that more than 50% of the loan comprises of a traditional bank loan, and meanwhile, 40% is provided by a Certified Development Company (CDC). Borrowers have the responsibility for 10% down payment. Further, the SBA offers a guarantee on the CDC part of the loan.
Since this kind of loan is availed for purposes like buying large machinery or real estate, it is comparatively large, with an upper limit of $10,000,000. The rates involved are different and are monitored by five-year and 10-year U.S. Treasuries. This is different from the rates for other SBA loans.
Borrowers with large SBA loan requirements only need to apply for the 504 loans. Furthermore, if customers are not looking to get financial assistance for large machinery or real estate, it is better to look for other options. Moreover, the 504 loan requires a down payment and is one among the few loans which require the same. This is due to the large size of the loan.