504 loans are one of the most popular SBA lending programs. But how exactly can small business owners use a 504 loan?
How Can I Use a 504 Loan?
First off, let’s define what a 504 loan is. According to the SBA, 504 loans provide long-term financing to purchase major fixed assets that promote growth and job creation.
Now, you may be asking yourself what is a “major fixed asset.” Equipment and real estate are the two items that fall into this category. Therefore, you can use your 504 loan to purchase:
- Existing buildings or land
- New facilities
- Long-term machinery and equipment
Alternatively, loan proceeds can be also used to modernize:
- Land, streets, parking lots, and utilities
- Existing facilities
On the other hand, a 504 CANNOT be used for working capital or inventory; to consolidate, repay, or refinance debt; or to speculate or invest in rental real estate.
These loans provide up to $5 million in financing, with maturity terms of 10, 20, or 25 years.
Do 504 Loans Work for Me?
If what you need is to purchase equipment or real estate for your business, then a 504 loan is probably the best alternative for you.
However, keep in mind that although most businesses are eligible for an SBA loan, there are exceptions. To discover if your business is eligible, check out our previous post: Who qualifies for SBA loans?
If your needs are not covered by the scope of a 504 loan, don’t worry—there are other options available.
The SBA also offers the 7(a) loan program. A 7(a) loan can be used for a wide range of purposes:
- Working capital
- The purchase of equipment, machinery, furniture, supplies, or materials
- The purchase of real estate
- The construction of renovation of buildings
- Establishing a new business
- Assisting in the acquisition or operation of an existing business
- Refinancing existing business debt (under certain conditions)
If you are interested in an SBA loan for your business, contact the experts at Gellyfish Commercial today. They will be happy to assist you in selecting the solution that makes the most sense for you.
Gellyfish: Certainty of Execution in SBA Loans
Looking for SBA loans in California, or anywhere in the United States? Gellyfish is here to help. We offer financing with the certainty of execution you need to take your business to the next level.
Contact us today by email (info@gellyfishcommercial.com), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our full range of financing options.
