Tag Archives: sba 504

Lisa Alberti - SBA-504 Loan Program

Valley Franchise Owners Use SBA-504 Refinance Program To Help Reinvest In Businesses

Robert and Mary Perez take advantage of SBA-504 refinance program.

At a time when jobs are hard to come by and many small businesses are cutting back, Robert and Mary Perez are growing their Metro Phoenix businesses and reinvesting in their biggest asset – their employees.

The Perez’s own and operate six Wendy’s franchises and employ close to 120 people. They were recently facing one significant balloon payment on a commercial real estate loan and dealing with a high interest rate on another. They looked into refinancing via the Small Business Administration. CDC Small Business Finance and Alliance Bank partnered to provide the loans.

“The SBA-504 refinance program couldn’t have come at a better time for us,” Perez said. “The two refi loans we received were the perfect solution, offering us a low, fixed rate for 20 years on both properties. The monthly savings now gives us the ability to hire three more mid-level managers at a higher starting salary and increase the staffing hours for our existing employees.”

The new financing enabled the Perez’s to take advantage of a low interest rate, currently at 4.70%, and a low down payment of 10%.

“I know there are more small business owners, especially in Phoenix, who are facing a hike in their current loan payments,” said Lisa Alberti, CDC Small Business Finance loan officer. “Business owners who own their building and facing an insurmountable payment can benefit from this program, but they need to act fast because the program ends September 27.”

The basics of the SBA-504 refinance loan are simple:

  • To be eligible, the small business must be a for-profit company with tangible net worth of less than $15M and after-tax profit of less than $5M.
  • Any small business with a commercial mortgage at least two years old may be eligible.
  • Payments on commercial loan to be refinance must be current with no delinquencies or deferments in the payments in the past 12 months.
  • The eligible small business must currently occupy 51% of the property to be refinanced. The refinanced amount can be up to 90% of the appraised value of the subject property. The required down-payment is 10% of the total loan amount.
  • The program is structured like SBA’s traditional 504 loan program: borrowers work with third-party lending institutions and a SBA-approved certified development company, typically a non-profit organization like CDC Small Business Finance, to obtain financing.
  • Existing 504 loans and government-guaranteed loans are not eligible for refinance.

SBA estimates that as many as 8,000 businesses across the country are eligible to participate in this refinance program, which will provide up to $7.5B in SBA-guaranteed financing that will leverage total project financing of almost $17 billion.

The SBA-504 loan program was created by the SBA for the specific purpose of financing long-term fixed assets such as commercial real estate and equipment with economic life of 10 years or greater.

CDC Small Business Finance’s office is located at 2575 E. Camelback Rd., #450. For more information on the SBA-504 loan program, contact Lisa Alberti at (602) 635-8413 or lalberti@cdcloans.com

Lisa Alberti - Small Business

Paving The Way For Phoenix Small Business Growth

Foreshadowing federal reports of an uptick in demand for commercial real estate and small business lending, CDC Small Business Finance recently funded two loans to help a local company purchase three commercial buildings in Phoenix.

We wanted to take advantage of lower property values and low financing rates to purchase the buildings,” said Todd Franklin, owner of Arizona Sun Supply, a wholesaler/distributor of solar screen products. “The additional square footage we gained will give us the space we need to warehouse all of our raw materials and give us more room to grow.”

Franklin benefited from using the Small Business Administration 504 loan program, designed to help small businesses purchase commercial real estate at below-market fixed rates and minimal down payment. The anticipated result is that small businesses expand and are able to create new jobs.

CDC Small Business Finance teamed up with Bank of America on the Arizona Sun Supply loans. CDC provided the SBA-504 fixed-rate loan to finance 40% of the total purchase, Bank of America provided 50% with a conventional loan and the small business needed only to contribute a 10% down payment. Arizona Sun Supply’s commercial real estate loans totaled just less than $1M.

Typically, small businesses are unable to tap into the long-term capital market, but can do so with a SBA 504 loan. Business owners of growing companies usually come to a crossroads of whether they should buy a facility or lease. An SBA-504 loan makes purchasing attractive because the cash down payment required by the owner is minimal, allowing the small business to preserve its cash for ongoing operations. Plus, long-term tax benefits are often realized.

Arizona Sun Supply, Inc. (AZSUN) operates as a niche supplier with a focus on specialty products that reduce the negative impact of the sun. As the top supplier of Textilene products, a durable mesh fabric made from PVC resin that is specifically designed to block the sun’s harmful rays, the company sells at wholesale prices to the general public across the U.S. In Arizona, they only work directly with sunscreen and shade structure businesses.

“The window shade business can be cyclical based on housing growth rates in the market,” Franklin said. “However, we’ve been growing at a steady rate because we continue to add new products to sell across the country and have not been reliant on sales in one or two markets.”

The primary areas of growth have been in shade fabric installed in parks, schools and other outdoor venues. Arizona Sun Supply’s general product line includes solar, screen fabrics, sliding and swinging doors, aluminum screen frames, sail and structure fabric, insect and pet screen and Textilene outdoor fabric enhanced with fire rated performance.

Over the past six months Small Business Finance has funded 21 SBA-504 loans, partnering with banks to provide $39M in financing to Arizona small businesses.

“Like Arizona Sun Supply, small businesses are taking advantage of lower property values to purchase new facilities for expansion,” said Lisa Alberti, loan officer for CDC Small Business Finance.

Alberti added that other Arizona small businesses are taking advantage of a refinance program revamped by the SBA and available through September. This program is designed to help small business owners facing balloon payments on conventional commercial property mortgages. The current refinance rate through this program is 4.95%. (For more information, http://tiny.cc/SBA504refi).

The 504-loan program was created by the SBA for the specific purpose of financing long-term fixed assets such as commercial real estate and equipment with economic life of 10 years or greater.

CDC Small Business Finance’s office is located at 2575 East Camelback Road, Suite 450. For more information, contact Lisa Alberti (602-635-8413 or lalberti@cdcloans www.cdcloans.com)