Wednesday, June 4, 2008
Small Business Administration Loans SBA
The Small Business Administration guaranteed loan programs are a great way for businesses to purchase real estate that they need. The most attractive aspect of the SBA is the low 10% down payment required. Also, the SBA loans are tied to the prime rate which right now is approaching historical lows. Banks are very willing to lend on SBA loans because their risk exposure is far less due to the guarantee provided by the SBA. Let me know if you want a great recommendation to an SBA loan agent.
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An SBA 504 loan may be a prudent vehicle for 90% acquisition financing, when the owner will occupy more than half the space in a building. The loan is a two-part transaction: a conventional lender (bank) provides 50% of the cost and a CDC (Certified Development Company) lends the other 40%. The CDC portion is typically 20 due in 20, fixed for the term at a rate determined by sale of debentures. This rate varies over time but not so much by source. The effective CDC rate for June 2008 is ~ 6.57%. Available rates and terms for the conventional portion vary greatly, depending on the lending institution, and negotiating skill, but offerings with rates fixed for 10 years or longer are common (usually a 25-year amortization).
It is wise to ask an experienced consultant to arrange at least a few competitive options for you to review. I have done this on many occasions, and would by happy to consider inquiries for purchases of at least $1m. Give your financing effort the same quality of deliberation you have given to your choice of property. Your success in business is my goal too. Call Mario and ask him for my number. I'll educate you. - Dave Singleton, BaySierra Financial
The Small Business Administration (SBA) is an independent agency of the Federal Government, established by Congress to advise and help the Nation's small businesses.
Many SBA Lenders will give special consideration to minority and/or women owned businesses.
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