Why pay to rent space when you can own your own building?

Small business owners looking to purchase a facility or new equipment should research the US Small Business Administration (SBA) 504 Loan Program. The benefit of securing this type of loan is that it provides "the little guy" access to the same type of long-term, fixed-rate financing that larger companies enjoy.

In this program the lender (bank) provides 50% of the funding, SBA 504 secures up to 40% and the business owner makes a down payment of 10%. The minimum loan size is $200,000 and all for-profit businesses with an average net income (after taxes) of less than $2 million qualify.

In most cases, interest rates are equivalent to favorable bond market rates. For example, the November 2007 interest rate was approximately 5.5% and will stay fixed for the duration or "life" of the loan.

The SBA 504 loan may be used to purchase fixed assets such as:

-- Land

-- Capital improvements

-- Long-term machinery & equipment

The program also covers "soft" costs such as legal & architectural fees, environmental studies, appraisals and other interest & fees on the construction in some cases. The SBA loan requires a 10% down payment from the applicant.