By Luana Iftimie

Finding a way to grow your business can be exciting and confusing all at the same time. Everyone from business funding companies, banks, angel investors to venture capitalists and even family members want to lend you money. It seems like an avalanche of opportunities and the best choice will be the one that fits your business type, industry, market and most importantly your goals. Business lending is one of the most debatable topics because it involves risk and time and your 2019 development projection might depend on it. It’s important to know what loan best fits your needs, costs and requirements as well as the timeframe until you have access to funds. As a top and trusted local lender, National Bank of Arizona believes a step forward happens only when the ins and outs of business lending are fully understood by our customers. Our Business Banker, Jason Solarez, believes that “(…) It’s important to assess the business’s current needs to find the most suitable solution for them”. Along with the Small Business Administration, we strive to offer a competitive 504 loan* in the Arizona market.

What is the 504 loan program?

Looking to finance major fixed assets such as real estate? The 504 loan is a versatile program that covers almost all project expenses.  The loan is usually split between you (10% - representing the down payment), the bank (50%) and a non-profit Certified Development Company (40%). The Small Business Administration insures the loan up to $5 million dollars in case of default. 

When should you consider applying for a 504 loan?

The 504 loan is for commercial real estate purchases such as land or buildings. The minimum loan amount starts at $300K and goes up to $10 million dollars, with a fixed rate and 20-year repayment term. Whether it’s for manufacturing equipment, installation or grading qualify as well as fixed assets that can be financed up to $10 million dollars with a fixed rate under a 10-year term, both circumstances require a 10% down payment and a 3% the financing fee on the cash borrowed. NB|AZ is a chosen lender for the 504 – CDC Program. Our local bankers help retail, healthcare (medical and dental offices) and law offices move in or build brand new offices in Arizona under 90 days from the approved application.  

Which situations do not qualify for a 504 loan?

  • If you must stock your inventory for the next season, you should research other financing options such as the 7(a) program, conventional lines of credit or credit cards
  • When working capital and sales plans don't go as planned, it means that you should focus on short-term loans, lines of credit, factoring or consider negotiating payments with your trade creditors
  • Paying off, refinancing or consolidating debt
  • Speculative investments are considered a high degree risk investment due to the asset price fluctuations  
  • Using the cash from the loan for further real estate acquisition without property evaluations

Contact a banker or click here for more information about the 504 Loan Program. 

*Subject to credit approval, SBA approval. Terms and conditions apply.