Frequently Asked Questions

SBA 504 Loan Program
Established by Congress in 1986, the SBA 504 Loan is a national financing program designed to promote local economic development by helping healthy, growing businesses finance the acquisition of long-term fixed assets.

How can the loan funds be used?

  • Purchase, construction or the renovation of commercial real estate
  • Purchase of land
  • Purchase of specialized machinery and/or equipment for use by business
  • Professional fees, including appraisal, environmental, architecture, etc.

What are the benefits?

  • Build Equity Business property is a financial asset that has historically increased in value, providing a return on investment as equity accumulates.
  • Control Costs With a minimum down payment, commercial real estate ownership provides control over future operations because costs are predictable.
  • Affordable Payments Mortgage payments are usually the same or less
    than lease payments and will not increase.
  • Additional Income Additional income is received from leased or sub-leased building space.
  • Assumable There is a 10-year pre-payment premium on Preferred Lending loans. However, all loans are 100% assumable. So, if you’re ready to move again within the first 10 years, the buyer can assume your note.
  • Tax Advantages Commercial real estate investment provides a business with cash flow, appreciation, depreciation and principal pay-down. There are no tax advantages to leasing.
  • Pride of Ownership Owning commercial property builds your company’s reputation now and for years to come.

How is the financing structured?

  • 50%: Conventional loan from a bank or private institution/First Deed of Trust
  • 40%: SBA 504 Loan Program /Second Deed of Trust
  • 10%: Equity from business or personal resources as a down payment

What are the terms for the SBA 504 portion?

  • 20 years, fully amortized for real estate
  • 10 years on machinery and equipment

What are the interest rates?

  • The interest rates provided by Preferred Lending are below market
  • Rates are fixed for the term of the loan based on national Treasury Rates of five or ten years.

What are the requirements for eligibility?

  • Net profits after taxes must be less than $2.5 million; net worth must be less than $7 million.
  • Owner/user must occupy 51% of an existing building; 60% of a new construction project.
  • Through SBA’s Public Policy Goal, companies with 51% ownership by a woman, minority or a veteran or located in either a rural or Enterprise Zone are eligible to borrow up to $2 million. All other borrowers are eligible for a maximum of $1.5 million.

How long does the process take?

  • SBA approval is received within 7-10 working days of submitting a complete package.

How do I find out more?
Call Preferred Lending Partners are 303-861-4100 or log on to www.preferredlendingpartners.com