November Bond Sale Rate:
6.263%
(20 year fixed rate)
504 rates continue their slight downward trend – the blended 504 / bank rate might win the deal for you!
BFG Seeking New Loan Officer
Business Finance Group is seeking a loan officer for the central region of Virginia. Please contact Sally Robertson at 703-352-0504 or at srobertson@businessfinancegroup.org for further information.
If your Maryland small business is or will be located in a designated neighborhood revitalization area, the Neighborhood BusinessWorks Loan Program could enhance the financing package. Loans from $25,000 to $500,000 are available to be used in conjunction with a 504 project or for working capital. Both start-up and existing businesses as well as non-profits are eligible. Loan terms could be advantageous for the small business. Further information is available at Maryland Department of Housing and Community Development web site at www.mdhousing.org or by calling 1-800-756-0119.
How Does 504 Stack Up For Your Customer
Adequate working capital is one of the primary success factors for a small business. The 504 program helps preserve both cash and other assets that can be pledged to raise working capital leading to a safer loan for both the bank and the business owner. By limiting the down payment required and including all the relevant project related costs (soft, renovation, closing, etc.), the borrower is able to retain more cash in the business. Additionally, the 504 loan program generally looks solely to the project collateral as security for the loan. That means the borrower retains other business and personal assets to pledge to secure working capital financing. Added to that, the 504 program’s below market 20 year fixed rate and 20 year fully amortizing term to help keep monthly payments low. See the estimated initial cash savings below:
Project Costs
Building Purchase
$1,000,000
Renovations
$170,000
Furniture Equipment
$20,000
Appraisal/Environmental
$5,000
Closing Costs
$5,000
$1,200,000
504
7(a)
Conventional
Loan Structure
90% of Projects
85% of Projects
80% of Projects
Loan Amounts
$1,080,000
$1,020,000
$936,000
Down Payment
$120,000
$180,000
$264,000
Total
$1,200,000
$1,200,000
$1,200,000
Initial Savings with 504
N/A
$60,000
$114,000
We are able to provide an analysis for your customer comparing the costs of a 504 loan, a conventional loan, and a 7(a) loan. Please contact us at info@businessfinancegroup.org for an analysis for your customer.
