It shouldn’t come as a surprise that SBA 504 loans are a hot commodity these days. With the recent introduction of the SBA’s Economic Injury Disaster Loan program and the Paycheck Protection Program, it seems there are (at this moment) a variety of options for business owners to choose from to obtain small business loans.

But what if you’re not looking for assistance, and instead are seeking business loans to grow your business or acquire a building for your business location? The SBA has several options for small business owners and entrepreneurs to choose from, but like many other forms of business loans, the process can seem daunting and a bit overwhelming.

Small Business

But, fear not. At Business Finance Capital, we’re here to help with a variety of business loans, specifically the SBA 504 Loan Program. Here are a few quick tips to help sort through the noise and make the right choice to meet your financing objectives.

Tip 1: Study your options and determine your current financial situation

The more you know about your business, the better you’ll be able to ascertain the right business loan, and/or prequalify for certain loan options. Keep in mind the three C’s of business lending – credit, cash flow and collateral:

Credit refers to your history of paying your debts on time; cash flow is the measure of your company’s financial health (annual revenues minus annual expenses) and demonstrates your ability to repay the loan; and collateral refers to your assets available to pledge for the loan. Be prepared to address these three C’s with your lender.

Small Business Loan

Tip 2: Know what your business needs are and what the loan will be used for

Different SBA loans cater to different financial needs. Case in point, the SBA 504 loan is generally used for the refinance/purchase of owner-occupied commercial real estate, construction and fixed-asset equipment.

504 Loan Program

The SBA 504 program provides financing for 51% or greater owner-occupied commercial real estate, whether for a purchase or refinance. Down payment for a purchase is only 10%. A bank or non-bank lender provides 50% of the financing in the form of a 1st mortgage and the 40% 2nd mortgage portion is funded by private and institutional Wall Street investors which is government guaranteed. For a refinance, the