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504 Loans SBA Myths

SBA Myths Debunked

Sometimes, your first thought when government is involved is to become terrified of the bureaucracy you believe will be involved in the process. We’re not going to lie – there is some with SBA 504 loans, but really that’s a myth. We’ll debunk that one and others in the paragraphs below:

Myth #1: SBA Loans Will Take Too Long
At one point in time, this probably was true. And, it can still be true at times with certain lenders. However, at our firm, we can get you a pre-approval letter usually within 24 hours and a commitment in under a week, providing you get us the documentation quickly. The SBA itself typically takes only 48 hours to examine underwriting documents. Remember, technology allows us to transfer documents in minutes that took weeks to deliver years ago.

Myth #2: It’s Too Much Paperwork
We’ve refined our process so tightly that it almost mimics the process of a commercial lender. It may even be less work than when you refinanced your home! Because we’re a specialist, we know our own process well.

Myth #3: SBA Loans are Only for Poor Borrowers or Start-Ups
Many of our clients have tens of millions of dollars in revenue annually. The typical current client experiences between $2 – $10 million in revenues annually. Even though they’re not as widely known as ordinary bank loans, they’re superior in that they require smaller down payments, which allows the company to divert more fiscal resources toward growth.

Myth #4: The Fees are Too High
Nobody likes fees, but they are necessary. SBA 7(a) loans have a multi-tiered fee system, which is a real nuisance for borrowers. The fees are slightly higher than what you would pay at the bank, but they are financed by the loan, and you have a lower down payment. This allows you to grow now, when you are ready.

Myth #5: SBA Loan Rates are Higher
504 loans almost always have fixed rates. If you get a blended rate, that rate is almost exactly the same (within .1% or so) of the loan rates you would pay a commercial lender. If you receive a 2nd mortgage from us, that rate is actually lower than the rate you would typically be charged at a bank.

Myth #6: All SBA Lenders are the Same
SBA lenders actually vary with their approach. Price is an important consideration, but make sure you don’t look at it as the only consideration. Keep in mind experience, past customer service performance, and industries of expertise are factors also.

For the right businesses, 504 loan terms work so well that you simply cannot ignore them.

Contact NEDCO to learn more about 504 loans, or to apply for yours today!