A loan program that helps small businesses offers additional relief by waiving fees and the first few months of payment on certain loans, according to a press release from SEDA-Council of Governments.
SEDA-COG offers the US Small Business Administration’s 504 loan program throughout Pennsylvania, which offers fixed rates, long terms, and low down payments. Now some fees associated with the loan are waived due to the CARES law passed at the end of last year. The elimination of fees reduces the reimbursable fees to the borrower and the effective rate of the loan 504 from the rates shown.
The SBA will also pay the first three months of payments on behalf of the borrower for loans approved by the SBA by September 30, depending on the availability of funds.
Doug Wilburn, director of SEDA-COG’s corporate finance program, said this was good news for many small businesses battling the pandemic.
“Small businesses are the backbone of the economy, and many customers tell us that the SBA 504 loan program gives their business the boost it needs to grow by freeing up working capital. Now, this new fee and payment exemption gives businesses leeway, especially in these difficult times ”, Wilburn said, according to the press release.
The SBA 504 loan program can meet the needs of many growing businesses, including purchasing an existing building, new construction, or renovating a building. It can also be used to purchase equipment and refinance existing real estate or equipment debt.
Companies can finance up to 40% of a project at a long-term fixed rate. A down payment of only less than 10% helps businesses preserve their working capital. Real estate purchases benefit from a period of 20 or 25 years and depreciation without lump sum payment.
Equipment purchases can also be financed through the 504 program with a duration and amortization of 10 years.
Eligible applicants include for-profit companies that occupy the majority of their space with a net worth of less than $ 15 million and less than $ 5 million in after-tax profit.
For more information on SBA 504 loans through SEDA-COG, contact John Reichard at [email protected] or 570-850-0195.