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Using SBA 504 Loans

Discover commercial real estate loans to finance projects that help your business operate more efficiently

Are you looking to expand your business? Whether you're buying a retail space, developing an empty lot, renovating an office or equipping a doctor's office, you'll need to find a small business loan to help your company get on its feet. But finding the right commercial real estate loan or business equipment loan can be challenging for newer business owners, who may not have the cash reserves to support a typical down payment or credit to get the financing they need. Business owners in this situation might want to consider applying for the Small Business Administration (SBA) 504 loan through Citizens Bank.

How does an SBA 504 loan work?

Originally created to help improve local economies by assisting small and rural businesses, local Certified Development Companies use the SBA 504 loan program in partnership with your financial institution to provide long-term, fixed-rate loans. It can position your business for that next step to help you finance essential assets, such as commercial real estate, renovations, equipment, and more.

The benefits for your business are many:

Whether you need to conserve working capital, desire a minimal down payment or prefer a below-market fixed rate, your business may be able to take advantage of the following benefits of commercial real estate and business equipment loans:

  • A lower down payment (typically only 10% required) that helps conserve working capital
  • Soft costs, such as title insurance, appraisal, environmental, legal fees, closing costs and SBA fees, can be financed as part of the project
  • Longer repayment terms that reduce payments and improve cash flow
  • The partnership with the Certified Development Company (CDC) is a favorable structure for the banks and expands their ability to lend
  • The below-market fixed rate helps forecast and control debt expense for business owners

The goal of these commercial real estate loans is to help stimulate the economy through the growth of local businesses. With a low down payment and fixed-interest rate, an SBA 504 loan can help make financing your company's growth more manageable. It helps conserve working capital, and the longer repayment term reduces payments and increases cash flow.

How can you use an SBA 504 loan to expand your business?

A SBA 504 loan can be used for the below business banking needs:

  • A commercial real estate loan to purchase land and buildings
  • A commercial construction mortgage to build a new property or make renovations on existing properties, such as parking lots, lighting and utility upgrades, landscaping, or making a property more energy efficient
  • A business equipment loan to purchase equipment, including manufacturing equipment, construction equipment, office furniture, medical equipment and more

How to apply for a SBA 504 loan:

Ready to take your small business to the next level with an SBA 504 business banking loan? Call your Business Banker to find out if you qualify for financing through the SBA 504 program. Next, estimate how much you need to borrow and open a business savings account to set aside at least 10 percent of the cost as a down payment for your commercial real estate or business equipment loan.

Then, work with your Business Banker to gather all the paperwork required by the bank and the SBA. You will need tax returns, details on the history of your business, including number of employees and annual revenue, and profit and loss statements. Fill out an SBA 504 loan application with Citizens Bank — and have your financial information ready for review. Before approving your business banking loan, Citizens Bank will consider if your business has sufficient cash flow, adequate collateral, and funds to support on-going working capital needs aside from the loan. If you meet these and other requirements, our lenders will help your finalize the amount and rate of your loan.

With your new SBA business equipment or commercial real estate loan, your business might be small now, but it won't be for long. You'll be able to start expanding and impacting the community around you as you grow your own business and make your dreams a reality.



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