The SBA 504 loan program is a great option for skilled trade professionals looking to buy, build or refinance their own commercial space. This includes plumbers, electricians, HVAC technicians, painters, carpenters and more. Recently, SomerCor has worked with a plumbing & HVAC services business in Roselle, a home improvement and design company owned by a general contractor in Chicago, and a landscape architecture firm in Villa Park.

Those in the skilled trades play a critical role in helping others achieve meaningful life milestones – from buying a dream home to the grand opening of a new business. These professionals, often small business owners themselves, construct and repair the properties that make our communities strong. Below are three ways the SBA 504 program can help skilled trade professionals access capital to sustain and scale up their business going forward.

Reduce Your Monthly Payments

The SBA 504 loan program provides a long-term, fixed rate lending solution for small business owners to buy, expand or refinance major fixed assets – such as land, commercial real estate, and certain equipment. 

For a borrower looking to purchase a building, the final loan structure includes a third party lender (typically a bank) providing 50% of the financing, a certified development company (like SomerCor) providing up to 40% of the financing, and the applicant putting down 10% of the financing. These borrower-friendly terms provide a pathway to property ownership and growth:

  • Low down payment – up to 90% financing for established businesses, freeing up capital to reinvest in the business
  • Below-market interest rates
  • Long-term rates 10, 20, or 25 year fixed – no surprise balloon payments

Flexibility to Personalize and Renovate

Building ownership is just the start of the SBA 504 loan. Borrowers can make critical building enhancements and modifications to meet new safety protocols and create a state of the art facility. 504 loans funds can be used for:

  • Expansion, construction, and renovation of a new or existing facility – personalized for optimum customer service, efficiency, and the flexibility to grow
  • New equipment purchases to expand capacity and streamline operations (as part of a real estate transaction)
  • Upgrades and modernizations to reduce energy use or offset that consumption through renewable energy

As with all SBA 504 real estate purchases, the business must occupy at least 51 percent of the building purchased. If the financing is for the construction of a new building, the business must occupy 60 percent of the building.

Leverage Equity for Cash Out

For those professionals who already own an office or facility, the SBA 504 REFI may be a great option to save and improve cash flow.

In addition to the lower monthly mortgage payments, fixed 20 or 25 year low interest rate, and payment predictability of the 504 loan, REFI clients can take cash out for eligible expenses. The cash out piece ranges up to 20% of the appraised value of the property. Eligible expenses for cash out funds include:

  • Salaries (non-owners)
  • Rent
  • Utilities
  • Inventory
  • Business line of credit and business credit card debts

Download the program flyer and connect with a member of SomerCor’s loan origination team to learn more about how the SBA 504 loan program is a great fit for skilled trade professionals.

Margaret Griffin

EVP, Chief Lending Officer

Eric Bacon

SVP, Loan Officer

Darin Gehrke

SVP, Loan Officer

Elisabeth Williams

SVP, Loan Officer