According to the SBA, “The CDC/504 Loan Program provides long-term, fixed rate financing of up to $5 million for major fixed assets that promote business growth and job creation. 504 loans are available through Certified Development Companies (CDCs), SBA’s community-based partners who regulate nonprofits and promote economic development within their communities.”
In a nutshell, it’s basically set up for you to own your own property as a business owner. If you’re buying or refinancing pieces of property (where you occupy at least 51% of it), here are the details you need to know.
- If you own property today, you can refinance it
- You can refinance an existing SBA loan which you were not able to do before the Consolidated Appropriations Act, 2021, was signed into law.
- You can refinance your property into a fixed rate for 25 years at 2.62% and the government will pay your first six months of principal and interest payments on any new loans and any refinance
- You can refinance up to 90% of the loan-to-value which tells you how much of a property you truly own compared to how much you owe on the loan you took out to purchase it.
- You can also cash out refinance up to 85% of the loan-to-value
These are all things you should think about if you’re buying a new building. If you’re already in a lease, think about buying it out or buying the space from your landlord.
At TGG, we can help you figure out a breakeven analysis to see whether or not this makes sense for you because if you can buy a piece of property, put 10% down, get a 25-year fixed loan for 2.62%, chances are that’s going to be way under any rent payments you might be making today.