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If you're a business owner navigating the complex world of Small Business Administration (SBA) loans, you've likely encountered challenges and questions along the way. In this blog post, we delve into a conversation between Jordan and financial expert Beau, uncovering a financing strategy that could be a game-changer for business expansion: the SBA 504 Green Loan Program.
The Initial Dilemma: SBA Loan Limits and Business Expansion
The conversation started by expressing a common concern among business owners with existing SBA loans – the cap on the aggregate amount, set at $5 million by the SBA. With an outstanding SBA loan of $4.5 million, Jordan envisions purchasing a warehouse for business purposes, seeking a financing solution that provides high leverage, akin to the benefits of the original SBA loan.
The SBA 504 Green Loan Solution
Beau responds with a strategic approach, proposing the use of the SBA 504 Green Loan. This program introduces an innovative twist by incorporating energy-efficient components into the property, such as LED lighting. This not only aligns with environmental sustainability but also unlocks a potential aggregate amount of $60.5 million in SBA proceeds.
How It Works
- Energy Efficiency Integration: The SBA 504 Green Loan involves sending an engineering firm to assess the property or reviewing plans. By identifying opportunities to enhance energy efficiency, such as adding LED lighting, the property becomes eligible for the program.
- Loan Structure: Unlike a traditional SBA loan, the 504 Green Loan comprises a conventional first loan and a secondary SBA piece. This unique structure allows for a more substantial total loan amount.
- Aggregate Amount Consideration: Importantly, the SBA 504 Green Loan doesn't factor in existing SBA 7A loans. This means that Jordan's current $4 million 7A loan wouldn't hinder the eligibility for the 504 Green Loan.
The SBA Hack You Didn't Know About
Beau refers to this financing strategy as an “SBA hack,” a term not widely known among business owners. This highlights the importance of exploring unconventional yet advantageous avenues in the world of SBA financing.
Exploring Other Possibilities
While the SBA 504 Green Loan stands out as a high-leverage option, Beau acknowledges the existence of other potential strategies. Refinancing an existing building into a 504, especially if it's currently under a 7A, emerges as a viable alternative to reduce the aggregate amount.
Taking the Next Step: Booking a Call with Beau
For business owners like Jordan, seeking personalized guidance is crucial. Beau encourages individuals to book a call through bookwithbo.com to discuss their specific financing needs. Whether it's a startup, acquiring an existing business, buying a franchise, or expanding an office building, Beau emphasizes their expertise in navigating the intricacies of SBA 7A, 504, and other SBA loan processes.
Conclusion
Unraveling the layers of SBA financing reveals hidden opportunities like the SBA 504 Green Loan. By leveraging energy efficiency improvements, business owners can not only meet their expansion goals but also exceed traditional loan limits. Don't miss out on these financing gems – explore the possibilities and secure the growth your business deserves.