I have so much respect for small business owners.  Each day they make hundreds of small and large decisions.  Some decisions are relatively simple, like what brand of coffee to buy for the break room or what company to use for overnight shipping.  But more commonly, the decisions made are far more difficult and impact not only their livelihood, but potentially that of their employees, customers, and vendors.  Decisions such as staffing levels, pricing, or location of the business can be critical to the long-term success of the business.

It is the last decision that I would like to discuss in this blog.  As a business grows, one of the key challenges is deciding how much space the business requires.  Whether it is extra office space for additional employees, more retail space for additional inventory, or extra industrial space to add production, the small business owner must perform a cost/benefit analysis of the expansion.  In many cases, the business owner simply talks to a commercial leasing agent who finds the appropriate amount of space in the right location.  Many owners, however, are unaware that it may be more beneficial, in both the short run and long-term, if they purchase a building.

Modern Storefront 300 DPI

One of the primary ways that business owners acquire real estate is through the Small Business Administration’s (SBA) 504 loan program.  The SBA 504 program is a real estate acquisition loan program that partners a financial institution with a certified development company (CDC).  Some of the benefits of the program are as follows:

  1. The SBA 504 loan program allows a qualifying business to purchase commercial real estate with as little as a 10% down payment.  The business can keep additional cash in the business for expansion, rather than having to tie it up in a larger down payment.
  2. The SBA 504 loan program allows for a portion of the debt to have a fixed rate for 20 years at very competitive rates, meaning the borrower will have payment certainty on that portion of the debt.
  3. With each payment, the owner reduces the principal balance on the loan and builds equity in the property, something that never occurs when leasing.

FirstBank is proud to be the most active Small Business Administration (SBA) 504 lender in the state of Colorado.  Since 2006, FirstBank has originated over $300 million in SBA 504 loans that have allowed businesses to expand and create hundreds, if not thousands, of new jobs.  Additionally, our primary CDC partner, Colorado Lending Source, is the largest CDC in Colorado and one of the top 10 in the nation.

If you are a small business owner and are considering expansion, I would encourage you to research the SBA 504 loan program and to talk to any of our loan officers to see if this program is right for you.  Additional information can be found at the following links:

FirstBank Commercial Real Estate Loans

Colorado Lending Source (Commercial Real Estate & 504 Program)

Good luck and happy hunting!

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