The 504 BVR INDEX
As successful business owners, you certainly know how much you pay every month for rent, and you probably have a very good idea of the cost of purchasing the dream location for your business. With that in mind, we have created the 504 BVR Index–(Buy vs Rent) to illustrate what it would cost to buy your commercial property rather than lease or rent it.
The math is simple. The CURRENT 504 BVR Index is: 5570, which means that to finance your project with a 504 loan this month, you would pay an estimated $5,570 per month per million dollars of project cost. In formulating the BVR Index, we are assuming that:
► Your project would qualify for 90% financing, which is normal for 504 financing. Note that special purpose properties and companies less than 2 years old require higher down payments.
► You or your company would be able to provide 10% of the project cost as the required cash (or equity) contribution.
► The financing fees and the cost of the appraisal would included in the overall project cost and financed with the project.
► We have estimated a bank interest rate of 5% and a bank loan amortization of 25 years, which are typical at this time.
► Your 504 loan funds at current 504 rate. Each month a new 504 rate is established and the BVR index will be adjusted monthly for this.
We hope that this helps simplify the benefits you can enjoy with 504 financing. If you think you’re spending too much in rent, we invite you to see how Bay Area Development and 504 financing can help you acquire a permanent home for your business. Contact the Loan Inquiries team.