SBA 504 Loans---the Smart Solution to the Plight of the Small Fries

SBA 504 Loans---the Smart Solution to the Plight of the Small Fries

The market of the SBA 504 loans is recuperating at a rapid pace. The massive increase in the number of the applicants for the loan as well as hike in the gross amount of the sanctioned loan signifies the promising future for them. Such loans were designed to cater to the needs of the businessmen running small or mid-sized establishments. They often face the lack of funds and it is really very hard for them to garner the requisite amount to prop up their businesses. They face stiff competition from the big guns in the business world. The business tycoons can adopt the policy of the large scale production and embrace the capital-intensive technology. Such policies chop down the unit cost of production and they can go on expanding or start a new venture without any hazard. But the small fries need help of the SBA 504 loans to run without any hazard and materialize the plans under the carpet.

The SBA earned a blemished reputation due to the lack of professionalism in the procedure of loan sanctioning. Many a borrower often cites this reason as their unwillingness to apply for the SBA 504 loans. They hold the pessimistic views that either they will be turned down by the banks or it will be just a wasting of time due to the delay in the entire procedure of loan sanctioning. But the scenario has improved a lot thereby contributing to a change in the attitude of the borrowers.

While discussing about the SBA 504 loans, inevitably enters into the scenario the SBA 7a loans. The former type of loans refers to a huge amount that can be grabbed by the borrowers. The amount of the SBA 504 loans ranges over $2,000,000 to $7,000,000. The SBA 7a loans are associated with $400,000 to $2,000,000. The borrowers can achieve favorable rate of interest in both the cases and can avail 90% of the financing.

One of the major advantages of borrowing the 7a loans is they come with a series of flexible criteria. The commercial mortgage loans as extended by the aforesaid loan programs of SBA are very safe as the government plays the role of guarantee for a large part of the loan. Still, many a borrower judges both the SBA 504 loans and SBA 7a loans with the jaundiced eye. They prefer to accept the terms and conditions of the later type of loans as the 504 program allows for only purchase transactions.

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