Protect Yourself From Interest Rates Hikes with SBA 504 Loan

The Small Business Administration offers a wide range of solutions to help small businesses with their financial and other needs. The 504 program provides SBA loans with fixed rates. Plus, these rates are typically much lower than would otherwise be available. Taking advantage of this can be a great strategy for many businesses.

The SBA 504 Program

This loan program offers small businesses financing for a variety of needs. The program operates through traditional lenders such as banks. When a business takes out a loan, the SBA guarantees part of the loan. This means that business owners can get large amounts of funding with relatively little collateral and money down. These are some examples of what 504 loans can be used for:

  • Purchasing or renovating real estate
  • Refinancing other debt
  • Construction
  • Buying equipment with at least a 10-year service life

The most significant characteristic of 504 loans is that they come with fixed interest and terms of up to 25 years. This means that you could potentially borrow money for a major purchase and be paying it back with the same interest rate for the next 25 years.

Like other SBA loans, those through the 504 program have very competitive interest compared to conventional small business loans. However, they are still tied to national rates set by the government.

Leveraging 504 Loans in Your Financing Strategy

Recently, interest rates have been low. However, they may start increasing again in near future. If you jump on the lower rates now and lock them in with a 504 loan, you could potentially put your business in a very strong position financially going forward.

Of course, you can’t just take out a 504 loan for working capital. It needs to be used for a specific purpose. However, if there are any capital assets you are considering buying in the near future, it may be a good idea to start working on them sooner rather than later. For example, if you are thinking about buying a new property to expand your operations, locking in a low rate may be worth accelerating your plans.

Get Started Today

Learn more about SBA loans today to see if one may be right for your business’s financing needs. The 504 program can be very advantageous when interest rates are low. However, there are plenty of other options through the SBA that can also be helpful. Contact a lender to discuss what options are available for you.


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