SBA 504 Financing: Explaining Loan-to-Cost

SBA 504 Financing: Explaining Loan-to-Cost

Are you interested in understanding loan to values or loan to cost when it comes to SBA 504 loans? In this video, we discuss the differences between SBA 504 loans and 7A loans, and the pros and cons of each option.

In this video, we cover:
- The loan to cost limits for SBA 504 loans, including the 5% haircut for startups and special purpose properties.
- How the 7A option allows for higher leverage, up to 90% of total project cost.
- The differences in fixed rate terms and prepayment penalties between SBA 504 and 7A loans.
- When to choose a 504 loan for larger total project costs.
- How to determine the best financing option based on your business plans and property use.

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Timestamps:
(00:40) The impact of being a startup and having a special purpose property on LTC
(01:02) The differences between SBA 504 and 7A loans, considering LTC, higher leverage, prepayment penalties, and fixed-rate terms.
(01:59) Comparison of current rates for SBA 504 and insights into the factors influencing the choice between products.
(02:38) Explanation of how SBA 504 loans are suitable for larger projects, with examples of project costs and considerations for choosing between 7A and 504 loans.
(03:12) Common questions about the choice between SBA 7A and 504, considering underwriting processes, and discussing factors that influence the financing decision.

💥 Thanks for watching 💥
#businessfinance #sba #SBA504

About Beau: Beau Eckstein is a franchise consultant, commercial mortgage advisor, and business ownership coach who helps entrepreneurs buy, build, and expand their businesses. He assists aspiring entrepreneurs in finding their ideal franchise or business opportunity. Beau's expertise as an investor and business owner allows him to guide clients through the entire process of acquiring, funding, and growing their ventures.

🎥 The video interviews we do on IFP will help you scale your real estate business and learn how to finance your all your projects.

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Learn great insights and make the right decisions through the Investor Financing Podcast hosted by Beau Eckstein.