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Only on Changes in SBA 504 Financing May Make Your Dream of Owning Your Spa a Reality

Posted: July 6, 2011

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If you are leasing space for your spa, today’s low interest rates and the many benefits of the SBA 504 loan program make this an opportune time to look into buying your facility. By purchasing your facility rather than leasing it, you may be able to control its financial future, receive tax savings and enhance cash flow.

Spa and beauty services that have benefited from SBA financing include: Acqua Med Spa in San Rafael, CA; Casa de Maria Corporation in Van Nuys, CA; Marilyn Jaegar Skincare, Inc., in San Francisco, CA; Natural Nails in Los Gatos, CA; and Women’s Fitness Center in Fairfax, CA.

Working with CDCs

To obtain an SBA 504 loan, small business owners work with Certified Development Companies (CDCs) to process the paperwork. CDCs are private corporations that are certified and regulated by the SBA to make SBA 504 loans in specific geographic areas. Approximately 250 CDCs operate throughout the United States. The role of the CDC is to assist the small business in obtaining 504 financing in partnership with a private lender. (Editor's note: If you are interested in applying for a 504 loan, contact the CDC nearest you. You can get a listing from your local SBA District Office).

Benefits of SBA 504 loans include:

  • Up to 90% financing is available for the purchase, renovation and construction of owner-user commercial property; businesses are typically only required to provide 10% injection.
  • Larger loans for larger businesses; recent SBA 504 loan updates increased the maximum loan amount and expanded company size standards for eligibility. Most privately-held companies in the United States are now eligible.
  • Below-market, long-term interest rates; fixed for 20 years.
  • For the first time ever, small business owners are now able to use low-interest, government-backed SBA 504 loans to refinance existing underwater commercial mortgages.