The U.S. Small Business Administration provides a wide variety of useful tools to help entrepreneurs get a new venture off the ground or for an existing one to move to the next level.

Beyond all sorts of excellent advice from veteran business leaders and educators in one’s community and all sorts of forms and paperwork, the SBA is an excellent source of financing for a variety of loans which can give a new business a nice boost or help existing one make improvements to become more competitive and efficient.

Among the available funding options, SBA 504 Loans are especially useful. They consist of fixed-rate long-term loans that can be used to purchase heavy equipment or machinery or real estate, for the purposes of expanding or modernizing an operation. It can’t, however, be used to grow working capital or inventory, or to consolidate debt.

Typically, SBA 504 Loans are funded by an applicant providing 10 percent to 20 percent of the equity, at least 50 percent of the total coming from a private lender, and at least 40 percent from a Certified Development Corporation. CDCs are non-profit corporations designed to help stimulate local or regional economic development. They are regulated and certified by SBA in their area.

Why it’s a good idea

SBA 504 Loans benefit involved parties in different ways: the applicant will receive funding from a variety of sources. The private lender holds the first lien for the overall loan, and the CDC holds a second lien that can include the property, equipment or machinery.

The amount that can be loaned can vary by someone’s needs, up to $5 million. The amount available can grow if an applicant specifies how many jobs will be created and what the particular project will do to help the local, regional or national economy.

Potential benefits that can be stated in application paperwork include number of veterans that could be hired, and amount of energy savings that can be seen when everything gets up to full speed.

For more information about financing options visit Value Capital Funding.