Benefits of an SBA 504 Loan:  A True Win – Win

Did your parents ever tell you that if it is too good to be true, it probably is.  The one exception to this rule may be the SBA 504 Loan.  According to Joe Mayer, Senior Vice President at Heritage Bank and a former Lender of the Year, the 504 program “is a win-win proposition for both [them] and the bank.”

Joe’s clients, Mark and Amy Rider of Rider’s Automotive, were successfully growing their business.  However, they had outgrown their current space and were in desperate need of a new facility.  Joe states, “I remember specifically meeting them in the winter and Mark was working on vehicles out in the cold because they didn’t have enough shop space.”  The Riders believed if they had a larger building they could generate more business.  No one could argue that statement.  The only issue that stood in the way of the Rider’s going for their dream was a large down-payment.  They didn’t have a lot of money to put towards one.  That’s when Joe introduced Mark and Amy to Mike Crowe and the SBA 504 Loan.

But how is the SBA 504 Loan a win / win situation?  With the 504 rates being at historic lows, the customer gets the benefit of a low fixed rate for up to 25 years. They also benefit from a low 10% down payment, freeing up cash that they can keep in their businesses. On the other side, the bank likes it because it gives them another option to offer clients that can’t do a conventional commercial mortgage loan. The bank also takes great comfort in being in that 1st mortgage position on 50% LTV.

Thanks to the help of Mike the Riders qualified for the SBA 504 Loan and set their dreams of a larger facility in motion.  Now the Rider’s have a beautiful new building.  They have gone from 3 bays to having 8 functioning bays.  Business has increased and there’s even enough room for Mark to work inside the shop!  Things are going so well that they are working towards their next growth phase.

When asked if they would do it again or recommend the 504 Loan program to another business, Amy Rider says, “Absolutely!”  She thought that the SBA did thorough research into their business to ensure its growth potential.  While this did prolong the process a bit, the benefits of getting such attractive loan terms made it worthwhile.  “It helps small businesses be able to build their dreams without financially putting them in a bind.”  With the assistance of the SBA, Rider’s Automotive has more than doubled their space, added additional staff, and increased gross income.

With such positive results, why wouldn’t small businesses want to pursue the SBA 504 loan?   “I never hesitate to recommend the 504 program. I look forward to continuing to use it going forward,” says Joe.  And we look forward to working with Joe, his clients, and anyone else who is in need of our services.  If you have questions regarding the SBA 504 Loan program, please reach out to our Lending department at 513-631-8292

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