The SBA loans have got three partners while financing a project. The three partners are the borrowers, banks and the CDC. The SBA 504 loan offers the borrowers with fully amortized loans. The new amortized rate financing had been started since august 2010. In august 2010, the amortized rate with the SBA 504 loan was 4.931%. This rate is still continuing. The funds for these loans are being raised by a procedure. In fact, the funds are raised with the 100% guarantee of US government. But, there are some other matters to be looked after.
Loan for fixed equipment’s
If the financial solution has got fixed equipments which can last for a long time or commercial equipment, manufacturing equipment, the borrowers might be facilitated with a 10 years of repayment plan. And you must know that the long term repayment plans make things affordable. So, certainly, the 504 financial solution is a facilitating solution!
Special purpose loan
When the borrower is getting the loan from the SBA, the lenders must check out some important issues. When the borrower has been running the business for two consistent years, the avail of the 504 loan is granted as special purpose. Such as the gas stations and medical clinics, when ask for the 504 solution, it means that they need the loans for people with bad credit for special purpose. In such cases, the borrowers must increase the loan contribution. In general case, the borrower has to carry 10% of the loan responsibility. But, in such cases, the borrower might have to carry 15% or 20% of the loan.
The less amount of contribution will be performed by the CDC in this regard. Even, the CDC can provide 5% of the loan only. In most cases, the CDC will have to provide 40%. But, in such kind of solutions, the CDC will have to contribute maximum 35% of the loan money. So, you can assume the bigger responsibilities with the special purpose SBA loan are imposed on the banks and the borrowers.
Affording soft cost with the save amount of money
The total project cost is to be provided to the unsecured personal loans lenders. The lenders have got some authority to determine the area of the project cost distribution. If you have some money left in matters of equipment costs, you can use the saved amount to land or building. Also, you can get to use the money to construction area, furniture expenditure and in other soft costs. The professional fees will have to be paid by the borrowers. That money must have to be included in the budget. All these costs should be utilized from the amount of money which has been saved from the bigger expenditure zone.
If you avail a 504 loan, you can easily utilize the money to the total project cost. You can actually finance the total project with this amount of money if you can get to be a little strategic. Many people make a big mistake by carrying the soft costs from own pocket. But, this money can easily be saved from the 504 solution.