One of the great developments in printing has been digital technology. A digital printer can generate an amazing number of different images quickly and accurately. Historically, printing was done by pressing a plate with the original image against something else. As far back as woodcut prints, a picture was cut or etched into a plate made of wood or metal, and then paper was pressed against the plate to transfer the image to the paper.When offset printing was discovered, an additional step was added when the plate was pressed against a rubber band that then transferred the image to the paper. But no matter what the type of printing, the starting point was always a plate. When digital printing was developed, the plate itself became unnecessary, opening up a wide range of possibilities. A digital printer uses as its image source a digital file, not a plate. The image is scanned onto a specially prepared internal drum and the drum transfers the image to paper.Because the drum can be can be reused over and over for any image, the same machine can be used for a wide range of printing jobs with the switch between jobs much less costly than when a plate is used. However, due to the slower printing time, digital printing is best for smaller jobs. In most modern printing companies, digital printing is offered as a great solution for smaller print jobs that involve a unique result.One fun application of digital tech in the printing world is personalized books. Since the original image being used is simply a digital file, the actual content of the book can be changed easily. There are many companies that offer personalized children’s books and digital printing means family histories and stories can be printed and bound at a reasonable cost. Fine art reproduction also utilizes a digital printer. Astoundingly accurate copies of artwork can be made on the higher quality digital machines and artists have a great deal of control over the color balance and saturation of the final product.Printing is an age old art. Once accessed only by a few professions, high quality printing is now available to everyone and for those that have unique projects that require accurate reproduction; digital printers are an affordable answer.
Herbal Medicine – An Ancient Healing Art Still Relevant Today
Herbal medicine is arguably the oldest form of medicine and has been used by man for millennia.Herbal medicine is the use of plant materials to enhance well being and treat disease. Today, people all over the world are still using herbal remedies, which have been past down through the generations, which increasingly, scientific research is validating.Herbs are used as medicines for both man and beast, they are used to flavour food, enhance taste and are common ingredients in natural skin care products, soaps, potpourris, ointments, food and many other areas of human life. They have even found their way into remedies for our pets and livestock.Up until about 200 years ago, before western medicine was conceived of, herbal remedies where the only medicine available to man for treatment of illnesses and diseases. The Chinese and Egyptians developed traditional systems of medicine (Traditional Chinese Medicine and Ayurvedic Medicine, respectively) which incorporate a systematic approach to the diagnosis and treatment of disease.Since the early 19th century, methods of chemical analysis became more sophisticated and chemists began making their own synthetic versions of the ingredients originally found in herbs, beginning the transition from raw herbs to synthetic pharmaceuticals.Today, pharmaceutical companies are still heavily researching herbs/plants for ‘new medicines’ that may prove useful in treating many of today’s diseases, for which orthodox medicine has little or no answers.Since the advent of drug manufacture, users of pharmaceutical drugs have increasingly experienced more and more side-effects as well as resistance to these modified forms of medications.This begs the question, why try to fix something, when it’s not broken? Herbal medicine is working as well today as it has for hundreds of years and with respect to side-effects, herbal medicine causes far fewer adverse reactions and related health problems than their synthetic counterparts. In addition, herbal medicines are more easily tolerated because the constituents are not of a synthetic type, which are known to have potential long term, and sometimes irreversible side effects.This is not to say that taking any old herb is safe, far from it. Herbal medicines need to be treated with great respect and due diligence, as they too can cause harm if not used appropriately. However, herbal medicines in general do not pose the same risks of side-effects or adverse reactions as their synthetic counterparts. The human metabolism is designed to metabolise naturally occurring substances, and is not always able to metabolise synthetic drugs fully, potentially causing a myriad of health problems and occasionally deadly side-effects.Choosing a good, qualified medical herbalist can present a challenge, as this profession is not well regulated in many countries. It is important therefore to make sure that the herbalist you seek is a member of a professional association. In Australia there are several associations such as ANTA, ATMS, and others. Europe, Canada and the US also have professional associations that will be able to help in finding a qualified, reputable medical herbalist.It is important to take time and care in choosing the right herbalist – your health and wellbeing depends on it.
Should I Send the Collection Agency $10 Per Month?
This is a common question at my law firm. A potential client calls and says that they have defaulted on a credit card account. After I explain what their options are, they inevitably ask “Can’t I just send them $10 per month? If I do that, then they cannot sue me, right?” Wrong! This is a myth of the highest proportions. For reasons that I cannot explain, consumers often believe that it is better to send something, no matter how small, on an account that they have defaulted on, than to make the collection agency prove their case.In my opinion, it is one of the worst mistakes that you can make on a delinquent collection agency account. What these individuals fail to realize is that making that sort of gesture may do much more harm than good.Let’s look at the facts: The individual has defaulted on an account. The original creditor has given up on collection and sold the account to a collection agency. We don’t know when the default occurred, so time is of most importance. Making a payment, or an effort to pay, might be a large mistake for a number of reasons.The first reason is that you are acknowledging that you owe a debt to the collection agency. I would never recommend that a client do that. I prefer that the collection agency prove that a debt is owed, and to further prove that they are entitled to collect. Don’t do their work for them! The second issue of harm in sending such a payment is that it removes the Statute of Limitations defense. The Statute of Limitations is a law (which varies from state to state) which sets forth the amount of time that one has to file a lawsuit on a given subject. In Pennsylvania, where I practice law, the Statute of Limitations for Credit Card debt is 4 years.You can imagine the scenario where Joe Client defaults on a credit card in the year 2002. He fails to make payments for 5 years and the account ends up with a collection agency. The collection agency threatens to file a lawsuit, and Joe Client sends in a $10 check. Not only is Joe acknowledging that he owes a debt to collection agency, he has effectively terminated his argument of Statute of Limitations (which in this case would have prevailed in a court of law). Further, the collection agency (or anyone who sues you) is not obligated to accept anything other than payment in full of whatever amount it is that they are owed. Sending in the $10 payment is of no use, in my opinion.
Discover the Top 15 Secrets of Successful Commercial Property Ownership!
1.) What’s Your Type?There are many different types of commercial properties that you can purchase including:o Office
o Retail Space
o Warehouse Facility
o Restaurant
o Commercial Condo
o Strip MallThe first step is clearly defining what type of property you want to purchase and how you want to use it. The following information will help you maximize your investment dollars to get the best possible deal when purchasing your property.2. Build Equity With Your InvestmentEquity is MoneyBuilding equity is the primary if not the ultimate reason to buy instead of rent a commercial property. Let’s face it. It’s money in the bank. In fact, it’s better than money in the bank because you can’t get the same kind of return on your money when it’s sitting in the bank as opposed to when you’re building equity. Moreover, if you choose the right financing for your commercial real estate purchase, you can not only build equity through ownership, but you can also leverage your capital saving in order to grow your business, hire additional employees, or even purchase an additional location when the time comes.Owning beats renting because you can sell your investment once you outgrow the space or sell the business. Even if commercial property in your area has not appreciated (which is unlikely), you can recoup your investment by renting out the space once you move out and by selling when the time is right.If you plan on growing into your building, buy something larger than your current needs, and rent out the extra space until you need it for expansion. This will provide you with steady income that you can use to help pay your mortgage or invest in your business.
3. Calculate Your Savings And Your Potential ProfitLower Monthly PaymentsConsider buying commercial real estate as a savings for your business. Real estate costs are the third largest business expense, behind payroll and taxes. Long loan amortizations mean that your monthly payments could wind up being less than what you would pay for rent, since landlords usually charge more than their monthly loan payment. In other words, owning your own commercial property may actually be more affordable, depending on current market conditions.Ask your lender to provide you with an analysis of the current market in your area so that you can see which scenario is best for you (renting or buying). The lender should be able to explain your options in detail with examples of monthly rental costs vs. monthly loan payments and the benefits of each.Analyze the Rent ValueUpon finding a property that peaks your interest, find out the status of the current tenants (if it is a multi-tenant property) in terms of how much rent they are paying. Check the current market to see if the rents are undervalued, meaning below what you can get in the current market. Your realtor or lender should be able to help you figure out how much you could charge for rent and determine how much of a profit you can make each month.Tax AdvantagesThere are many tax advantages to becoming an owner of a commercial property. In most cases, you can deduct part of the value of the building at tax time, as well as improvements you’ve made as depreciation, which can save you more money on your taxes. Buying the property under your business or corporation’s name is also a better tax strategy than under your personal name.4. Do Your ResearchThe more you can learn about property types and options, mortgages, financing, zoning and remodeling; the better position you’ll be in to make wise decisions concerning the acquisition of a commercial property.However, you don’t have to know everything. That’s where putting together a powerful team of professionals proficient in their areas of expertise may be your most important step. Building a team of advisors – people you can trust to steer you in the right direction is critical to your success.Understand Current Market ConditionsKeep your eyes open for news articles pertaining to the commercial real estate market. Is it “hot” right now? Is it a buyers’ or sellers’ market? What kinds of interest rates are available?The Internet is a great place to start. Conducting a Google search for “commercial real estate market,” for instance, will give you results that include news and resources for national trends, analytics and market research.In addition, many realtors, lenders and lawyers across the country offer free and timely articles on their websites that shed light on current commercial real estate trends nationwide. Again, make sure you listen to both sides of the story.Tap Expert ResourcesNational market research companies can give you specific information about the area where you’re preparing to locate your business. You can also find information on demographics including the median age, household income, breakdown of ethnicities, and more from censuses available from the U.S. Census Bureau.Also contact commercial lenders or realtors for additional resources. In looking for help, it’s usually better to talk to a lender or realtor with nationwide experience and up-to-date information than a small-time operation that might not have recent data for you. If the lender/realtor hasn’t gotten updated demographics since 1996, you’ve essentially wasted your time. Also, a lender or realtor that specializes in the type of property you’re looking for will be more likely to have the specific information you need, which will save you time in research.Study the Current Vacancy RateResearch what the vacancy rate has been over the past few years for the area you’re taking into consideration. If there seem to be high levels of vacancies, try to find why. Is it a bad neighborhood? Talk to store owners in the immediate area and find out how long they’ve been doing business there. Ask if they have any concerns that you as a potential property owner should know about the area.Research Commercial RealtorsIt’s important to research commercial realtors that specialize in the type of space you’re looking for. Grill the realtor you are considering selecting on the entire purchase process so you know what to expect. Ask how long the process usually takes so that there are no surprises. Check their references and their track record (more on finding a Commercial Realtor in #5).Examine Experienced Commercial LendersChoosing a lender and financing program is just as important as choosing the property. Again, find out the entire process of financing, as well as your different options. Don’t assume that just because you’ve had a relationship with your bank for years that using their financing is the best choice.Banks don’t always offer the lowest rate for commercial loans, and sometimes have a far longer turnaround than non-bank lenders. Some banks require that you transfer your accounts to them in order to qualify for a loan. Be aware of any stipulations when seeking a bank for a commercial loan.5. Choose the Right Commercial RealtorAs mentioned before, you need qualified partners to help you with the process of buying commercial property. Start with a terrific commercial realtor.Some commercial realtors work exclusively with individuals interested in investment properties. Others work with owners/users of commercial real estate, and among those some specialize in property management, which can be an added value to you.Who Do You Know?Referrals from trusted sources are usually the best way to find a good commercial realtor.Ask QuestionsSet up a meeting with more than one potential commercial realtor. Find out as much as you can about their professional background, education, and experience with your type of property. You can ask for a list of recent transactions to give you an idea of what they deal with on a regular basis, and how many properties they’ve actually sold in the last year or two. And most importantly, ask for client references (testimonials)! Real client feedback is the most effective measure for potential success.The Right MatchMake sure you choose a realtor that understands your specific needs. If you are a small business, you don’t want to work with a realtor that normally handles multi-million dollar deals. Your project may become less of a priority when that particular realtor gets a bigger commission to worry about.6. Consider Your Time FrameIf the reason you are looking for commercial property is because your lease is ending, think twice before jumping into a decision you might regret. Finding just the right space, securing financing and going through the process of obtaining a commercial property can take months. If you don’t have that kind of time, you may need to rent month-to-month for now.Take Your TimeWhile you may be in a hurry to move into a space, take your time. Buying any kind of property is a major decision, and buying commercial property is even more important for the development and growth of your business. Selecting a property in the wrong area, or a space that doesn’t allow you to grow can hinder your company and even cause it to fail, so plan carefully.If the realtor or lender gives you an estimate of three months from start to close, plan for longer – just in case. Keep in mind there are many people involved in the process of buying property, from the seller, realtor, lender, appraiser, surveyor, paperwork approvers, secretaries, and more and this process can often take slightly longer.7. Location, Location, LocationOne of the most important factors in considering commercial property is location. If a property is located on a busy corner that is difficult to get to, your business may not do well (in fact, that’s probably why the property is for sale). If you want to operate a dog kennel and the property you’re considering is in a residential area, not only will your business disturb the residents, the zoning laws may prevent you from operating there.Foot TrafficFor a retail business, look for areas with high foot traffic that will give you the exposure and increased walk-ins you need to be successful.If you are looking for an industrial or manufacturing facility, then you can stay out of the retail limelight and buy something in a warehouse district. These areas are usually cheaper than retail space.Easy AccessMake sure your location has easy access from the road. Look to see if the site is at a difficult intersection. Is there construction going on that seems like it won’t be ending any time soon? On the other hand, what’s the potential once the construction is completed?Check out the CompetitionIf you want to open a bistro in a neighborhood that has several bistros, you might want to try somewhere else with less competition. However, a healthy population of restaurants usually means a healthy population of customers.Know Your CustomerFind out the demographics of the area you’re interested in. If you want to move your sports apparel shop to a new location, you’ll probably want an area with a high percentage of youth and active adults. An urban area with a lot of pedestrian traffic might be better for this kind of retail shop than a suburban area in a retirement community.8. Free ParkingWe’ve all spent time driving around and around looking for a parking spot. It can be very frustrating, especially when you’re running late. Whenever possible, you want a location that has ample parking for your visitors.
If you have a retail store, restaurant, or other high-traffic business, estimate how many customers or visitors you’re likely to have at any given time and consider rejecting any properties that have fewer available parking spaces than your estimates. Again, use your best judgment and consult your realtor.Avoid HeadachesAlso pay attention to how your parking is situated. If it’s located just off a major road, it may provide a headache for people trying to back out of the parking space, and may even cause accidents. When visiting the property, see how well you can maneuver the parking. If it’s a hassle for you, it will be doubly so for a potential customer or visitor.9. Get in the ZoneBefore you begin the negotiation process for a commercial property, make sure to investigate the zoning laws, as well as what types of businesses you are able operate there. There are zoning laws about the type of business that can be conducted in certain spaces.For instance, some spaces do not permit food and beverage to be served, or may have restrictions on how late a business can operate. The typical zoning districts in most cities include: residential, commercial, industrial and mixed-use.Don’t AssumeZoning can be tricky, so do your due diligence on this topic. Don’t assume that just because the previous tenant of the space had a restaurant that the property you’re looking at is necessarily zoned for food and beverage. Many businesses slide under the radar for months or years while violating zoning laws. Making assumptions can cost you big time and big money when it comes to zoning.RegulationsZoning laws can regulate not only the type of business that can operate, but also parking, signs, water and air quality, waste management, noise, appearance of building and more. Find out any and all regulations regarding the property in advance.Visit your local library or zoning office to get information on all the zoning laws, rules and regulations that apply to the property you’re considering for purchase. Talk to people at the zoning office if you have concerns or questions prior to making the investment. Ask your realtor to double-check your efforts to ensure you’ve covered all your bases.10. InspectionNormally, if you are considering buying a home, you have an inspector look at the structure, pipes, electrical system, etc. A commercial property requires even more of a stringent inspection, not only to meet your needs, but also the requirements of the local government.Before purchasing commercial property, hire professionals to thoroughly examine the electrical system, including the sprinkler and security system, as well as the plumbing, phone, and Internet systems. Since you will have already done your homework on zoning and regulations, you will be aware of the building codes. With the results from your various inspections you can get an estimate of how much work, if any, will need to be invested in order to get the building “up to code.”A Good FoundationHire an architect or engineer to examine the foundation and structure, especially if you have frequent natural disasters such as earthquakes or hurricanes in your area of the country.CommunicationIf you are looking at an older building, there may be quite an investment up front to either meet city standards or meet your own standards. Don’t overlook the importance of a high-tech phone and Internet system, especially if you have a lot of employees. If there is not already a T1 or fiber optic network in place, build this cost into your purchase, as it will save you money and headaches in the long term over more traditional (and older) phone and Internet systems.Make sure to hire an expert to tell you if the changes you need are possible and within your budget. With most commercial real estate loans, you can include these remodeling costs in your financing. Again, make sure to ask.11. Map Out Your PlanAs a business owner, you understand the importance of carefully planning every move. Buying a property requires no less preparation. Before you begin looking for a building, sit down with your finances and figure out how much of a mortgage you can afford to take on.Create a BudgetWhen calculating your budget for buying property, don’t leave out taxes, insurance premiums, and repair and maintenance, as well as costs involved in customizing the space to meet your needs. Failing to create a budget for these often overlooked expenses will quickly put you in the hole with your new property. If you need help creating this budget, ask your realtor or your commercial lender for advice.Room to GrowTo determine the amount of mortgage you can afford, assess your income and expenses. Your mortgage and property expenses should leave you enough room to operate your business without cutting into your normal expenses.Sometimes it is necessary to take a cut in profit in order to purchase the kind of space you need to grow. Think of it this way: buying a larger space will allow your company to stretch its wings, which will result in more profits down the road. It’s a risk you sometimes need to be willing to take if you want to grow. Remember, if you buy more space than your company needs immediately, you can acquire tenants who will provide rental income that can significantly offset your monthly mortgage obligation.Planning AheadIt’s almost always a good idea to buy slightly more room than you currently need. You can lease out the additional space until you need it. If this is your plan, map out how this will bring in income to help subsidize your mortgage. Remember, however, that you may have periods when some of the space is unoccupied, so don’t rely on the rent coming in to cover your mortgage every time. Make sure you can cover the mortgage on your own.Have an Exit StrategySo, how does it all end? Hopefully with big dollar signs. After all, that’s why you’re investing, isn’t it? To eventually cash in on your investment. Therefore, you need to have an exit strategy.You might choose to hold onto your commercial property through retirement, as real estate is a great asset that can provide you with a steady passive income stream: a lucrative retirement strategy.
12. Before You Sign on the Dotted LineHaving a carefully drafted contract is key in your commercial real estate deal. You are required by law to have a written sales contract, and it is to your advantage to have one with each detail of the transaction documented.Also, make sure to leave ample time for due diligence and closing, especially if any construction is involved!DetailsDespite the stories of real estate contracts being thicker than phone books, all you really need is a contract that lays out the important elements of your agreements. First, it needs to describe the property and the purchase price, as well as whether the price is due at closing or in installments.Equipment, etc.The contract should include any equipment, machinery, or personal property that is included in the purchase price. It should list any contingencies that must be met prior to completing the purchase. A common example of a contingency is whether you are able to obtain a loan to finance the purchase.Don’t Forget…The contract should cover how the property taxes and utility bills will be pro-rated between you and the seller, as well as what type of title insurance you must provide. The date for closing and delivery of possession should be in the document, as well as what legal recourse either the buyer or seller has in the event that the other party defaults on the agreement.And Always…Once the contract has been drafted, have a lawyer review it prior to signing it. A lawyer may be able to help you negotiate a better deal than what is originally presented.Unfortunately, not all property sellers are honest, and some will try to hide their true purpose in technical legalese within a contract. Having a trusted lawyer and commercial realtor review your contract will keep you safe in your transaction.13. Choose a Lender with CareThere are many types of lenders available to assist you with your commercial real estate financing. But keep in mind: not all are created equal. Do your homework in finding a lender that meets your specific needs.It’s important to find a firm that can give you broad access to capital, understand your priorities, offer you the best deal on your loan and complete the process in a timely manner.Types of LendersThere are three basic categories of lenders: direct lenders, indirect lenders and hybrid lenders. Direct lenders lend their own funds. Some examples of direct lenders include commercial real estate lending institutions, banks, and private lenders. Indirect lenders place funds on behalf of others, and include mortgage brokers and mortgage bankers, as well as financial intermediaries. Hybrid lenders both lend their own funds and lend on behalf of others, and include certain investment banks, investment advisors and credit companies.Banks usually generalize in services, and offer a wide array of products. While this may sound good, think about it for a moment. Would you rather have a lender that knows a little about many financing options, or a lot about three or four products designed specifically for you?Lending institutions are more specific in nature, and are experts in the products they offer. Banks are more traditional in their financing products, while lending institutions are more entrepreneurial and creative.Banks often require that you move all of your financial relationships under their umbrella, including deposits, LOCs, etc., while non-bank lenders only work with your real estate loan.The U.S. Small Business Administration (SBA) is a great resource for small companies looking to expand their business or purchase real estate for commercial use. The SBA offers tools that can help you plan your next move, as well as loan programs for a variety of business purposes. The SBA itself does not offer loans, but works through banks and non-bank lenders to provide small businesses with loan programs that meet their needs.Get Started EarlyIt is important to choose your lender early in the process so that you can maximize leverage and get a lower cost of funds. Your lender will ask for certain forms in order to determine your eligibility for financing, as well as to figure out what kind of deal you can negotiate.You will need to provide your income and expense statement, balance sheet and personal financial statements from all prospective owners of the property. If you don’t have them written already, you will need to create profiles of the management team, including information on education and employment background, as well as experience relevant to your business. Other documents needed include a property appraisal, contract of sale, and plans for the use of the property. Providing these documents early can help streamline the process. Again, your realtor and lender will help you through the process.14. Know Your Financing OptionsWhile you are in the “shopping” phase of looking for a commercial property to purchase, you should begin to research your financing options. There are many kinds of commercial financing options available, so it is important that you find the one that best suits your needs. It’s also very important to know how much you’re qualified to borrow. This will help you and your real estate broker find the right type of property for you faster.No matter what type of loan you wind up getting, negotiating the loan will be based on the same basic factors: anticipated use of the property, expected returns from the property or business conducted there, geography, type and size of real estate, perceived risk to lender and market conditions. There is no one rate applicable to all commercial financing. The rate you receive will be based on your specific situation.If interest rates are low, securing a low fixed rate will mean you pay less interest over the entire mortgage. A variable rate, which is considered by some to be more risky, can give you a lower payment for a period (before it increases), which will let you use the money saved for other investments.In weighing your financing choices, remember that some debt is good. Don’t assume you should take the loan with the highest down payment requirement so you can “pay off your debt faster”. Putting down more money means you have less to invest in your business.Term LoansBased on how much money you need to borrow, there are different financing options available. One option is a term loan. Term loans can be used for a variety of purposes, including financing permanent working capital, new equipment, refinancing, expansion, acquisitions and, of course, buildings.There are loans specifically designed for commercial real estate or equipment. Banks typically lend up to 80% of the value of the real estate to be financed, and the loans must be repaid in 15 to 20 years. If you are able to come up with the remaining 20% on the cost of the property (and don’t have anywhere better to invest the money), this is an option to consider.Up Up and AwayBeware of balloon payments. While paying a very low monthly amount at the start sounds great, you often end up spending additional money to refinance your commercial mortgage as lenders reset interest rates or reexamine you and your business over the life of the loan.Credit LineIf you want a more flexible loan, you may have the option of a credit line that can provide you with cash on an as-needed basis, up to a cap amount. Credit lines almost always have a variable rate, and have interest-only payments for the first one to three years.Equity Financing/Joint VenturesEquity financing involves joint ventures with investors that have the capital you need. Usually, the investor will receive a percentage of your business’ profit in exchange for the capital you need to purchase the building or stock in the company if it is public.Some investors will take a back seat to your executive decisions, while others will want a say in the operation of your company. Joint ventures are not for everyone, so keep in mind all of these factors when considering one.The SBA 7(a) Loan ProgramThe SBA has a variety of financing products that are ideal for small businesses. The most commonly used SBA loan is the 7(a) Loan Program. The loan is provided through banks or non-bank lending institutions.In order to be eligible for a 7(a) loan, your business must be for profit, and you cannot purchase real estate for investment purposes. There are many other guidelines to qualify for a 7(a) loan. The maximum amount a business can borrow from a 7(a) loan is $2 million. Furthermore, all SBA 7(a) loans have prime-based floating interest rates. This type of interest rate structure can leave you vulnerable to monthly/quarterly interest rate swings that can have a significant impact on your monthly mortgage payment.Now you can see why it is so important to find a commercial lender who can help you digest all of this information and take the time to explain your options.15. The Best Kept Financing SecretOne of the main reasons small businesses choose to rent instead of purchase their own commercial real estate property is the perception that they can’t afford the down payment. Many of them are not aware that SBA-guaranteed loans are available to qualifying applicants and can provide up to 90 percent loan to cost financing.In fact, the 504 loan program was designed to assist small businesses in building or purchasing properties while spurring business growth in the local economy.Only 10% DownWhile in some parts of the country, use of the 504 loan program is widespread, there are other areas, such as those east of the Rocky Mountains, where this program isn’t getting the attention it deserves. If you are unable to put down much of the loan cost, the 504 is worth looking at: it only requires 10% – and there are no closing costs in addition to the 10% down! (Please note that there are certain basic criteria you will need to have to qualify for the 10% down program. A good lender work with you to do his or her best to help you qualify for this benefit.)The other 90% of the financing comes from two places: up to 50% of the total cost (land, building, renovations, and soft costs) is paid for by a senior lien from a private-sector lender, and up to 40% comes from a junior lien from a Certified Development Company (this portion is backed by a 100 percent SBA-guaranteed debenture).Smaller PaymentsSince most banks and loan programs require a minimum of 20-30% of the property cost, and do not fold in soft costs and closing fees, 504 loans are a great way to get the best of everything: by paying only 10% down, you retain more capital and are able to make smaller payments over the life of your mortgage.Because you have two separate loans with the 504, you end up getting a blended rate that is below market. The first loan is either fixed or variable, and is at or slightly higher than conventional financing rates. The second mortgage (the 40% loan) is considerably lower than market interest rates, and is fixed for the life of the loan. Having a lower interest rate lets your company retain more capital.504 loans can close in 30 days or less, saving you time, and helping you get into your new property sooner. Another advantage is that there are usually fewer “hoops” to jump through to get approved, as long as you are dealing with a lender who specializes in this type of loan as opposed to one who might process one or two a year. The specialist knows this loan inside and out and can streamline the process, as well as make sure you are receiving all the benefits.
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