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504 Loans Problems & Solutions

Common Problems You Might Encounter & Their Solutions

Not every loan process is smooth and straightforward, even though we’d like to be. To make your 504 loan process as smooth and simple as possible, we’ll walk you through some of the most common problems and solutions encountered below:

Problem: Large Down Payments
In the early days of a business, cash flow is tight. But, we’ve got that under control. We only require a 10% down payment, while many commercial loans ask for 20 – 30%.

Problem: It’s Difficult to Make Monthly Payments for Commercial Real Estate
To protect their own cash flow and interests, lenders often offer only 15 – 20 years to repay the loan. However, we offer repayment terms of up to 25 years, which keeps your monthly payments lower and more manageable.

Problem: It’s Difficult to Access SBA Micro-Loans and Ordinary Bank Loans
Unfortunately, there is this gray area in the world of business financing. We help many small business owners by financing businesses with a net worth of less than $7.5 million, a net income of less than $2.5 million in the past two years, and project sizes ranging from $250,000 to $15 million in total cost.

Problem: Ordinary Banks and Economic Developers Don’t Provide Useful Financing for Small Business Owners
It’s just a fact of life. However, as an entrepreneurial Certified Development Company (CDC), we fully understand exactly what you’re going through. Basically, we’re the perfect fit for businesses like you looking to access commercial real estate or fixed asset financing.

Problem: Fees and Expenses for Bank Loans Make them Fiscally Insensible for Small Businesses
We finance the closing costs and other fees with our loans. You don’t have to worry about losing another 2-3% of the loan value in fees. The 10% down payment you make is the only cost for accessing the financing.

Problem: Banks are Scared to Finance Industries Causing them Losses in the Past
The only companies not eligible for a 504 loan can be found at this www.sba.gov/content/sba-financial-assistance-eligibility

Problem: Ordinary Loans Force a Refinance in 5 – 15 Years When Repayment is Due
You always pay a monthly payment with our loans. Balloons, calls, and covenants are simply not present in our cost structure.

Problem: Sometimes You Need to Finance Equipment, As Well as Real Estate
Our 504 loans include the cost of equipment in the total project cost. However, we do cap this cost at 20% of the total project cost.

Problem: Ordinary Banks Place Lending Limits on Their Clients
If you experience this problem, remember we are a separate entity from your current lender. They may cap your lending limit, but we do not. Just make sure you meet our eligibility guidelines, and you should be okay.