504 FAQ

504 FAQ

Why should I consider a 504 loan?

Aside from the obvious advantage of contributing as little as 10% to your loan so you are able to preserve working capital, your business can save on interest expenses when taking advantage of the low rates afforded by a 504. The 504 program also allows for closing costs and other soft costs to be financed instead of these costs coming directly from the small business.

There are no hidden fees, no concerns with balloon payments, and lots of support for the small business owner. Business Finance Group handles all of the paperwork and details, including the servicing of the loan and the management of the loan process, giving you the comfort of knowing that experts are managing your loan.

Click here to view a comparison of the SBA 504 loan interest rate vs the Prime Rate
Click here to download an informational whitepaper

How long is the approval process?

Once your completed application and attachments have been received, it will take us 10 days to review and approve your request. Then, your application is forwarded to the SBA who will review it in 5 to 7 business days.

Is it difficult to apply?

No – it’s easy to apply. As with any loan, you will need to complete an application and provide certain information about your company and its owners.

Essentially the same information any commercial lender requires is needed, tax returns on the business, projections if it is a start-up business, personal financial statements and tax returns for owners and a brief history and description of the business.

Our experienced loan officers will help make the process simple and easy. Call 800-305-0504 or click here to go to the “Application”

Is there a pre-qualification process?

Yes – if your seller requires a pre-approval letter or if you are more comfortable negotiating a contract with a pre-approval letter in hand, we can review the financial information and provide a response in 2 business days.

Is my company too big or too successful for a 504 Loan?

504 Loans are targeted to successful, growing companies since those companies are most likely to create new jobs. Most privately held companies are not too large to qualify for 504 financing.

New ventures may qualify for 504 financing, but generally, companies applying for a 504 loan need proven repayment ability.

How does a 504 Loan compare to a 7(a) loan?

Both are SBA guaranteed loans. The 504 Loan is a low down payment, fixed-rate, long-term loan to assist a growing business to acquire a larger facility or more equipment. While the 7(a) loan can also be used to finance those costs, the down payment is generally higher and the interest rate typically floats at a higher rate. Hence, the total cost of a 7(a) loan to the company can be significantly higher than the cost of a 504 Loan. Our loan officers can provide you with a detailed cost comparison for your project.

How does the loan process work?

The process, as illustrated below, provides the business owner the opportunity to move forward quickly, while offering the bank the ability to secure details on the first lien and combined, the business owner, the bank and Business Finance Group work together to finalize the 504 loan process.