As a business owner, it’s likely that you’ll need to take out a business loan at least once. These loans will help you grow, make ends meet, and give you the capital you need to reach new goals. When you apply for a business loan with your bank, you’ll often end up paying a high interest rate based on your business’s credit score and profits. The Small Business Administration issues loans to help business owners get better interest rates and fairer terms and the 504 SBA loan take things one step further. Here’s what you need to know.

The Rate Is Lower Than Other SBA Options

All business loans have set interest rates, but loans backed by the Small Business Administration often have lower interest rates than traditional loans. The 504 loan, in particular, has an even lower interest rate than other financing options through the SBA. The lower your interest is, the smaller your monthly payments will be throughout the loan term, and the more money you’ll save in the long-run.

The Interest Rate Won’t Change

Most Small Business Administration loans have variable interest rates. This means they fluctuate with the current market. When the average rate goes up, your loan’s interest rate will go up as well.

The 504 loan features a below-market fixed interest rate. This means it won’t change for about 25 years. By then, you should have been able to pay it off in full and shouldn’t have to worry about interest rates potentially going up. Even better, you won’t have to worry about an extra-large final payment lurking at the end of the loan term.

There Could Be Downsides

In general, choosing a Small Business Administration loan is always in your best interest, but choosing a 504 loan over other loan options does have one major pitfall: it locks in the interest rate for the life of the loan. If the federal interest rate is high, this is a good thing. It means your interest rate will stay lower even when the market is changing. However, if the rate falls, you could end up missing out on lower interest loans.

If you’re considering a 504 loan, take your time and do your research. Get quotes for different types of loans issued by the Small Business Administration and compare the rates in detail. If a fixed-rate loan is best for your business’s needs, go ahead and apply.

Regardless of the type of SBA loan you take out, you’ll receive a lower interest rate and better terms than you’d receive from most business loans.