If You Have an Approved SBA 504 Loan, Here’s Why You Shouldn’t Wait to Close

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The past year has been marked by uncertainty. As you and your fellow business owners continue to work through COVID-related challenges, it’s difficult to predict what the future holds. When it comes to small business loans, there are a few things we know are certain.

If you’ve been approved for an SBA 504 loan with Pursuit you’re in a great position for long-term growth, especially if you close on your loan in the coming months. Here’s why it’s in your best interest to take the next steps toward closing:

1. SBA 504 interest rates are still at historic lows

Interest rates on SBA 504 loans are fixed a month after your loan closes. With improving economic conditions, interest rates for all types of loans are anticipated to increase in the coming months, including the SBA 504. That means that the sooner you close, the more likely you are to lock-in a rate that’s still at or near historic lows, for the life of the loan.

2. You can take advantage of SBA debt payment relief

In recognition of the last year’s challenges and continued uncertainty, the SBA is paying principal and interest on behalf of 504 borrowers for several months (currently, up to three months at up to $9,000 per month) until that funding is expended. Your Pursuit lender can help you determine whether your SBA 504 loan would qualify, but keep in mind that this funding is limited and could run out before you can benefit from it if you don’t close soon.  To take advantage of this benefit, your loan must be closed.

3. Your bridge loan has an expiration date

If you haven’t closed your 504 loan because you still have time on your bank interim (aka, bridge) loan, it’s important to realize several points. 

First, the bank interim/bridge loan has a maturity date that bankers usually do not want to extend. Extensions may be possible but it could result in increased fees, a higher interest rate or even a requirement for a new appraisal to approve.  

Secondly, payments on the interim/bridge loan are usually interest-only so you are not building any equity from your monthly payments. Finally, in some cases, the interim/bridge lender will wait to lock in the first mortgage interest rate until the 504 loan closes. This doubles your risk of receiving a higher interest rate and could have a profound impact on your monthly debt payments with delays. 

Get in touch with your Pursuit lender today

If your business has been approved for an SBA 504 loan and all closing conditions have been satisfied (including appraisal approval, environmental approval, certificate of occupancy provided), talk with your Pursuit lender today to take the next steps toward closing. We’ll ensure that you can lock in your interest rate as soon as possible to keep more money in your business as it moves forward. We look forward to working together!

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