Navigating SBA 504 Loans for Commercial Properties in West Chester

Small business owners juggle a lot. From managing daily operations to planning for growth, there’s always something demanding your attention. One of the biggest decisions you’ll have to make for your business is how to finance your commercial property.

If you’re a business owner in West Chester, SBA 504 loans might be just what you need. At Penn Street Mortgage, we can help you connect with reliable and trusted institutions to get business expansion financing in West Chester, including SBA loans.

What exactly is an SBA 504 loan? Let’s dive into what they are and how they can help you grow your business.

What are SBA 504 loans?

When it comes time to grow your business, finding the right loan program to get you there can be easier said than done. But, The Small Business Administration is a government agency who’s main mission is to help support small businesses by helping them get access to capital, grow as an entrepreneur, improve the economic development of our communities and more.

Part of helping small businesses grow is helping them get access to capital that they can use to purchase commercial real estate or make expensive machinery and equipment purchases. SBA 504 loans are one of the options business owners in West Chester, PA can explore from the SBA. These long-term loans offer fixed-rate financing for real estate or machinery, making it a great option for many cash-strapped entrepreneurs.

One appealing thing about SBA loans is that you don’t have to put down as much money upfront – usually just around 10%. This means you can keep more cash on hand available for other expenses your business might need, like payroll, inventory and more. Plus, with interest rates staying the same for the entire length of the loan, you can plan ahead and know exactly how much you owe each month without being thrown off by changes to your loan structure.

Why Choose SBA 504 Loans?

If you’re looking for a long-term option to expand your facilities and add commercial real estate, you should consider SBA 504 loans. Sine these loans lower the risk for lenders, they come with better terms and lower monthly payments compared to regular loans. This means you can keep your overhead costs lower and have a stable financing solution that can last up to 25 years.

How to Qualify for SBA 504 Loans in West Chester

Like any type of loan program, an SBA loan requires certain requirements to be eligible.

First, your business must be a for-profit company that operates in the U.S. Your business can’t be valued at more than $15 million, and the average net income must be less than $5 million after federal income taxes for the past two years.

While it might seem obvious, it will also need to actually qualify as a small business. The SBA has specific size standards that your business will need to meet to qualify for a 504 loan that varies by industry. In general, your business should fall within the small business size guidelines defined by the SBA. Our team at Penn Street Mortgage can help you review the requirements and make sure your business qualifies.

Outside of the financial requirements, there are a few other parameters you’ll need to keep in mind when applying for a loan. For example, the funds from an SBA 504 must be used to purchase fixed assets, like land, buildings, or machinery. It can’t be used for inventory or other expenses like payroll or repairs. The project must also create or keep the same amount of jobs to meet SBA’s mission of supporting the local economy. And, as a business owner, you must occupy at least 51% of the property if it’s an existing building, or 60% if it’s new construction.

How to Apply for an SBA 504 Loan in West Chester

Applying for an SBA 504 loan involves several steps, but understanding the process can make it much smoother.

  • Get your documents together: The loan application requires several documents, like your business plan, financial statements, and tax returns. These will be reviewed to prove your business is in good financial standing and ensure you’ll be able to repay the loan.
  • Get pre-qualified and find a lender: The next step is to get pre-qualified for the loan. This involves meeting with a commercial mortgage broker like our team at Penn Street Mortgage to find the right fit for you and confirm your eligibility. It’s important to select a broker with experience in SBA 504 loans so they can help you understand the process and ensure your application is putting your best foot forward.
  • Submit your application for approval: Once pre-qualified, it’s time to submit your formal application. This will include all the gathered documentation and a detailed project plan. The lender will review your application to make sure it meets all SBA requirements. Once you’re approved, the SBA will guarantee a part of the loan, making it easier for you to secure financing on favorable terms.

Applying for a commercial real estate loan is different than your typical residential real estate loan. That’s why it’s crucial to rely on professional help from a commercial real estate broker at Penn Street Mortgage to navigate your application process. You’ll get peace of mind you’re submitting a strong loan application and can grow your small business!

Work with Penn Street Mortgage on your SBA Loan

If you’re trying to navigate the SBA 504 loan process, our team at Penn Street Mortgage can help. Our decades of expertise can ensure you can secure the commercial real estate property you’ve been looking for and ensure you’re putting the strongest application forward.

As a small business ourselves we know how important it is to get favorable financing terms for your business. We’re committed to assisting small business owners like you navigate the complexities of commercial real estate financing. Contact us today to learn more about how we can support your business growth!

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