Everywhere there are signs – and the signs are showing that small businesses are emerging through the recession and beginning to thrive once again. According to data released by CDC Small Business Finance in Los Angeles, a non-profit Certified Development Company, small business real estate loans rose 40% in January 2010.
Signs of Revival
L.A. area loans for real estate purchases were up to $71.6 million, compared to $50.9 million in December. This is good news, especially from an area that was hit hard by the recession and has suffered some of the highest property foreclosures in the country during the last two years.
How the SBA 504 Loans Work
The loans are a part of the SBA 504 loans, aimed at helping small businesses acquire real property, large equipment, and other fixed capital needs. With the help of this program, small business owners have an easier time qualifying for and getting access to much needed capital to expand their business.
The SBA 504 loan is structured so that the borrowing business must pay only 10% down for the property, and the rest is financed as a split between a traditional lender and a non-profit corporation set up under the 504 code to help support economic growth in their local area. 50% of the loan is disbursed by the bank lender, with a guarantee from the SBA should the borrower default. The remaining 40% is disbursed by the non-profit corporation, known as a Certified Development Company (CDC).
What are the eligibility issues for obtaining a 504 real estate loan? Borrowers must have less than $2.5 million in net income over the last two years. Also, the net worth of the company must not exceed $7.5 million. Loans must be used to purchase improved real property, vacant land with the intention of constructing new buildings, renovating existing buildings, or for purchasing long-term equipment or machinery.
So many small businesses can benefit from this helpful guaranteed loan. If your small business meets the eligibility mentioned above, and you are ready to start expanding your business, look up your local CDC and find out how you can get access to money that will help your business grow.