Did you know that SBA 504 loans can support multiple operating companies within a single project, all under one roof?
This is just one way that the 504 provides flexibility and options for businesses who are looking to expand, consolidate or make improvements to their operations.
Imagine a dentist who dreams of expanding their practice but faces a significant hurdle: they need to occupy at least 51% of a new building to qualify for an SBA 504 loan. However, they only plan to use 50% of the space. To overcome this challenge, the dentist partners with an endodontist who also needs a new space. Together, they form a real estate holding company and purchase a 5,000 square foot building. By combining their practices, they fully occupy the building, meeting the SBA's requirements and securing the loan they need to grow their businesses.
In another scenario, a manufacturing company, a service company, and an installation company, all owned by the same individual, are spread across three separate buildings. The owner wants to consolidate expenses and improve efficiency by bringing all three companies under one roof. They find a suitable building and, by each company occupying one-third of the space, they collectively utilize 100% of the building. This not only meets the SBA's occupancy requirements but also streamlines their operations and reduces costs.
These stories illustrate how the SBA 504 loan program can help businesses facing unique challenges. By allowing multiple operating companies to share a single project, the program provides flexibility and support for businesses looking to expand, consolidate, or improve their operations. All 20% or greater owners of each real estate holding entity and each operating company are required to guarantee the SBA 504 loan, ensuring that the program's benefits are accessible to those who need them most.
