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Starting a business is a significant milestone, and securing the right financing is crucial for success. The SBA 504 loan program is a popular choice for many entrepreneurs, especially those looking to invest in motels. This program offers unique benefits that can help you score your dream motel. In this blog post, we’ll explore the ins and outs of the SBA 504 loan, including how you can leverage it for multiple properties, the aggregate limits, and additional loan options available to you.
Understanding the SBA 504 Loan Program
The SBA 504 loan program is designed to provide small businesses with long-term, fixed-rate financing for major fixed assets, such as real estate and equipment. One of the standout features of this program is that you can have multiple SBA 504 loans. It's essential to note that only the second loan counts towards the SBA aggregate limit because the first loan is typically a conventional loan.
Key Benefits of SBA 504 Loans
- Long-Term Financing: SBA 504 loans offer long-term financing options, which can extend up to 25 years for real estate.
- Fixed Interest Rates: These loans come with fixed interest rates, providing stability and predictability in your financial planning.
- High Loan Amounts: You can secure up to $5 million in total SBA aggregate, and up to $60.5 million with the SBA 504 Green program.
Maximizing Your SBA 504 Loan Potential
Aggregate Limits and the SBA 504 Green Program
A common question from potential borrowers is about the aggregate limits. As highlighted in the transcript, you can have up to $5 million in total SBA aggregate. However, if you opt for the SBA 504 Green program, this limit increases significantly to $60.5 million. This program is designed to promote energy-efficient or renewable energy projects, making it an excellent option if your motel project meets these criteria.
Multiple Loan Scenarios
For any given project, you can secure up to $5.5 million through the SBA 504 loan program. This flexibility allows you to tailor the financing to meet your specific needs. Additionally, if you haven't reached your $5 million aggregate limit, you can consider a 7A loan as an alternative. The 7A loan program offers more flexibility in terms of the types of businesses and uses for the loan, which can be beneficial if you have multiple business ventures under different NAICS codes.
Exploring Additional Financing Options
Conventional Loans and 7A Loans
In addition to the SBA 504 loans, you have access to other financing options like conventional loans and 7A loans. Conventional loans are often used in conjunction with SBA loans, providing a broader financing base for your business. The 7A loan program, on the other hand, allows for multiple loans under different NAICS codes, offering even more flexibility for diverse business ventures.
Tailoring Your Financing Strategy
When considering which loan program to pursue, it's essential to evaluate your business's unique needs and goals. Booking a discovery call with a financing expert can help you navigate the various options and determine the best path forward. Websites like bookwithbow.com offer such services, allowing you to dive into the specifics of your deal and choose the most suitable financing option.
Meet Your Business Ownership Coach
Beau, the driving force behind Business Ownership Coach, is dedicated to unlocking the path to business ownership. With over 20 years of experience in the lending industry, Beau provides valuable insights and personalized advice to aspiring entrepreneurs. By visiting businessownershipcoach.com, you can access a wealth of resources to thrive in your business journey.
Join the Community
If you found this information helpful, consider subscribing to Beau’s channel, where you can learn more about financing and business ownership. Beau is always happy to answer questions and provide great content to help you succeed.
Conclusion
Securing an SBA 504 loan can be a game-changer in achieving your dream of owning a motel. With its long-term financing options, fixed interest rates, and high loan amounts, this program offers significant advantages. By understanding the aggregate limits and exploring additional financing options, you can tailor your strategy to maximize your potential. For personalized guidance, book a discovery call and visit Business Ownership Coach for more resources. Start your journey towards business ownership today!