504 Loans Provide Capital Amid Credit Crunch

As traditional credit sources tighten their requirements, 504 loans are filling the gap for small businesses.

“Uncertainty and failures in credit markets are prompting small businesses and their lenders to take a close look at the 504 program,” said Todd Kocourek, FFCFC president & CEO. “What both are learning is that the program offers an excellent, lower cost means of helping business grow, and helping their lenders to serve them.”

The SBA 504 program, offered through Florida First Capital Finance Corporation (FFCFC), provides attractive financing to for-profit small businesses desiring to purchase real estate and improvements; construct new or renovate existing facilities; and/or purchase long-life machinery and equipment. The program is ideal for small businesses that are unable to obtain fixed-rate financing or financing on desirable terms.

Under a typical 504 loan, FFCFC provides financing at a fixed, long term rate for 40% of the project. A bank or other lender finances 50% of the project and the small business invests the remaining 10%. This is a decisive advantage to lenders facing increasing difficulty in convincing their own underwriters to approve 90% LTV financing.

Interest rates are below those offered by conventional lenders (and maturities are fixed for 10 or 20 years). Fees and other costs associated with the loan are financed in the loan. Successful lenders have learned to leverage these advantages to win in competitive situations.

For additional information, go to www.ffcfc.com or call 888-320-5504.