Gary F. Westfal

Unprecedented Opportunity To Purchase
Owner-Occupied Real Estate In NYC

Our current credit crisis does have a silver lining for small business owners who wish to purchase real estate or build new facilities to operate their business. The Small Business Administration’s  504 program provides up to 90% funding for the purchase of real estate or construction of new facilities has had positive news recently.

The 504 program  provides long term fixed rate financing of up to 90% in 2 parts – 50% in a commercial loan and 40% from a Certified Development Company (CDC) bond. NADCO, the trade association for the nation’s Certified Development Companies (CDCs), reports “ … that the interest rate for a 20-year SBA 504 loan continued to fall to 5.14% in September 2009. The September bonds that fund SBA loans were sold to investors this month at a rate of 4.2%. This low sale price, coupled with the fee elimination provided by the Congressional economic stimulus bill, resulted in an effective interest rate – including fees – of only 5.14% for borrowers in September. This interest rate is the second lowest rate since the SBA 504 loan program began in 1986.”

Chris Crawford, NADCO President, observed that “5.14% is an incredible rate for a 20-year, fixed rate commercial loan. Additionally, 504 loans normally require a down payment of as little as 10% from the business borrower. When you consider the drop in the price of commercial real estate and the inventory currently on the market, small businesses have a real opportunity to expand or buy their first building right now”

Obviously we do not know how long these historically low rates will last. I believe now is the time for business owners to take advantage of this opportunity.