Project Examples

Project Example

This loan program allows a small business to obtain a “home” (or purchase long-term machinery & equipment) at a reasonable, 20-year fixed rate of interest with as little as 10% down.

When you work with Business Finance Group, every aspect of your loan is managed from start to finish. We work in partnership with a bank to finance up to 90% of project costs. The bank provides 50% of the financing, the 504 loan provides up to 40% and you (the small business) contribute as little as 10%. With a 504 loan, the bank may provide certain terms that are more beneficial to your business than you might obtain conventionally.

If you had a project to purchase a building, your costs might look like this:

Building Purchase $500,000
Renovation $425,000
Furniture and equipment $50,000
Appraisal/Environmental Reports $6,500
Closing Costs $18,500
Total Costs $1,000,000

See more examples like this.

Using this examples, $500,000 (or 50%) of the loan would be a 1st lien with a bank, with a 10 year maturity and negotiable rate. $400,000 (or 40%) of the loan would be a 2nd lien, with a 20 year full amortized fixed rate, and $100,000 (or 10%) of the loan would come from your contribution.

Compare this to a traditional or conventional loan, and you would have to pay $220,000 instead of $100,000 as a contribution. A conventional loan would require you to pay 20% of the hard costs plus 100% of the soft costs of your loan and your rate could be higher and your terms could be shorter, taking valuable capital and limiting your cash flow.

The result? Using a 504 loan could easily save you $120,000!