Banks want you to utilize conventional loans.
The SBA 504 Loan has often been in the shadows of the other SBA loan program, the 7A. It’s unfortunate, but frankly, it’s part of human nature. Most providers of commercial loans in America are banks, occasionally credit unions, non-bank lenders, etc. Most people want to do what’s easiest for them, which is provide their conventional product. Unfortunately, that doesn’t always work for business owners.
A conventional commercial loan is probably 70-80 percent loan-to-value financing. That means a lot of down payment from the business owner. It may not be practical or economical in those cases. A business owner shouldn’t have to liquidate many accounts to come up with that kind of a down payment.
You’re not going to an expert.
Banks are banks. Banks don’t care about helping out small businesses, they care about making money. Our team at Fountainhead has extensive experience with the SBA 504 loan, closing over 5,700 loans for a combined total of over $23.8B. You certainly will not be a guinea pig with us. Banks on the other hand just want to steer you toward the easiest, safest bet for them.
You wouldn’t trust just anyone to be your doctor. You would want someone who’s highly experienced, so why should there be any difference when it comes to obtaining loans? Always reach out to an expert, and in almost every case, that won’t be your local bank.
Ask about the SBA 504 loan.
If it weren’t for some of the marketing efforts and educational efforts, there wouldn’t be as many people that know about the SBA 504 loan. I always argue if you’re a bank or credit union, put all three options on the table. The business owner is going to choose the SBA 504 loan. They may do the 504 loan for the real estate and have a companion 7A loan for the working capital piece. That makes a lot more sense for most business owners, even if it means more work from the lender. Find a lender like Fountainhead that’s willing to put in the work.