SBA 504 Commercial Real Estate Loan Ideal for Dental Industry

Owning a dental practice is a big deal. You gain autonomy, independence, and the ability to run your business– however, with all that comes stress and pressure. One pain point for many dental operators is occupancy restrictions.

You started your practice for freedom. Owning your property gives you stability for the long term. But being at the mercy of a landlord who can end your lease or spike your rate at any time is risky and restrictive.

Buying property for your practice may seem unobtainable. However, the SBA 504 loan is a financing solution designed explicitly for small business owners looking to switch from leasing to owning or those wanting to expand their reach.

Why Choose the SBA 504 Program?

The SBA 504 loan is an affordable financing option that allows dentists and other medical practitioners to buy commercial real estate – including an existing building or land to construct a new property – with a low down payment and below-market, fixed-rate financing. Construction costs, improvements, and equipment with a 10-year service life can also be financed. 

The terms of the 504 loan are unbeatable in today’s market. Benefits of the 504 loan include:

• Low down payment: As little as 10% down payment allows business owners to conserve working capital.
• Long terms: 10, 20, and 25-year options.
• Below-market, fixed-rate interest rate: A fixed-rate loan fully amortized over 25 years results in your monthly payment staying the same, and there is no balloon payment at the end of the term.
• No limit to total project cost: You can think big.
• No additional collateral is required: The only collateral required is the subject property.
• Support team: Business owners who utilize the SBA 504 program get ongoing support from a certified development company (CDC). The CDC guides business owners through the loan process, help with the paperwork and application, and is a partner through the life of the loan.

Case Study: SBA 504 Loan Enabled Tranquilo Dental to Purchase Building and Establish Practice

“You invest so much into building your business – I couldn’t run the risk of being at the mercy of a landlord,” she explains. “Five years down the road, if a landlord doubles your rent, you can’t just get up and move, you might lose your patients. Owning the real estate gives you freedom and stability.”

Last year, an opportunity presented itself: A shell dental office for sale in an ideal location. However, Dr. Mahanian quickly discovered she could not afford the down payment that banks required. Thankfully, she learned about TMC Financing and the SBA 504 Program, which allowed her to purchase with only 15 percent down. 

Because Tranquilo Dental is newly established, the SBA required a 15 percent down payment, but most businesses over two years old qualify for a 10 percent down payment.

Dr. Mahanian obtained what she calls “an amazing interest rate,” fixed for 25 years. She was also able to increase her cash flow by leasing out a portion of the building that she didn’t need.

Case Study: Desco Dental Improves Workflow Following SBA 504 Building Purchase

Family-owned Desco Dental Equipment Service Company was leasing three separate locations and was experiencing significant rent increases. Landlords were driving hard bargains, and their operational efficiency was declining. The owner of the business, Tony Vigil, was finally motivated to make the switch from tenant to owner.

Vigil always wanted to purchase a building for his business – but he never thought obtaining feasible financing was possible. By utilizing the SBA 504 loan program, Vigil could purchase a 2,500 square–foot industrial condo with only a 10 percent down payment at a below-market interest rate fixed for 20 years. 

“I’ve told many of my small business owner friends about the program,” states Vigil. “I never thought owning our building would be affordable or doable, but with the 504 Program, it was.”

“The SBA 504 Program is the whole package. Not only was the down payment affordable, but the terms of the loan were unbeatable. Our rate is fixed, so our occupancy costs are not going to fluctuate and surprise us down the road. I’m very glad I chose this program, and if any business owner has that opportunity to take advantage of it, I would wholeheartedly recommend it.”

Getting Started

Your local Certified Development Company, such as TMC Financing, can help you determine if you qualify for the SBA 504 Program. If you’re a small business owner in Arizona, California, or Nevada, contact TMC Financing to start the prequalification process, which can be done in a few days at no cost or obligation to you.

TMC Financing is the no. 1 provider of SBA 504 commercial real estate loans in the Western Region of the U.S., helping small businesses expand throughout California, Nevada, and Arizona. Founded in 1981, TMC Financing has funded projects worth more than $10 billion across California, Nevada, and Arizona. About 6,000 businesses have benefited from this financing, resulting in the creation of an estimated 60,000 jobs.