Covid-19 Highlights Another Advantage of the SBA 504 Program

September is National Preparedness MonthWith the nation continuing to respond to COVID-19, hurricanes and wildfires, now is the perfect time to evaluate your preparedness for the next inevitable disaster. 

Small businesses today have been faced with more challenges than anyone could have predictedPreparing for a pandemic was not on the forefront of any small business owner’s mind. However, it sheds light on the fact that anything can happen and a plan in place is of utmost importance. 

We at TMC are dedicated to educating small business owners on the Small Business Administration’s (SBA) 504 Commercial Real Estate Financing Program and the benefits it offers to them and their business,” explains Barbara Morrison, founder and president of TMC Financing. “We are advocates for small business owners.  We want to see them succeed and believe that buying a building rather than being at the mercy of a landlord is key to longevity.” 

SBA 504 Program Benefits  

The 10 percent down payment and below-market 25-year fixed rate are the main attractions to the SBA 504 Program.  Business owners can gain stability by purchasing a building for their business while retaining precious working capital thanks to the low down payment and below-market interest rate. 

However, a new, lesser talked about benefit has come to light with recent events. When you have an SBA loan and disaster hits – the SBA has your back.  

Following the coronavirus pandemic and forced shut down of the majority of America’s small businesses, the SBA stepped in and gave all businesses with SBA debt six months of debt forgiveness, no questions asked. 

The SBA 504 Refinance Loan Saves Wildwood Inn from Permanent Closure  

Muhammad Khattak is the owner of Wildwood Inn, a hotel located in a quaint resort village in Twain Harte, California.  Prior to the statewide shutdown, this charming hotel provided the perfect stay for tourists and business travelers who wished to be surrounded by the tranquility of nature.   

According to Khattakrefinancing using the SBA 504 Program is a huge reason his hotel business has stayed afloat during the COVID-19 crisis.   

Wildwood Inn had to completely close for 3 months,” Khattak explained. “My business was in trouble. It was truly a scary time. We then received news that the SBA would provide 6 months of debt forgiveness on our 504 loan. I was extremely grateful.  We reallocated those funds to where it was needed most – it helped my business survive. 

In addition to the six months of debt forgiveness, Khattak is saving about $3,000 a month in occupancy costs since refinancing with an SBA 504 Loan earlier in the year. 

Security from SBA 504 Loan Leaves Jensen Fasteners Feeling Grateful  

Ralph Jensen of Jensen Fasteners was feeling particularly grateful for utilizing the SBA 504 Program to purchase their building when he discovered that during a national disaster such as COVID -19, the SBA intervenes. 

“The fact that the SBA will step in during unprecedented times such as these is extremely comforting and makes me even more grateful for going this route,” states Jensen. “I feel like the luckiest guy in the world the way this all turned out. Owning our building is an amazing feeling! Our future is stable and the sense of security I have knowing that is unbeatable.” 

Bench-Tek Realizes the SBA’s Dedication to Small Businesses 

Bench-Tek Solutions, a provider of workplace equipment and furniture, utilized the SBA 504 Program to escape their escalating rental rents and gain stability for their business. However, when the coronavirus hit, they were shocked to learn that they would gain even more benefits from partnering with TMC Financing to obtain a 504 loan. 

We didn’t even have to ask for help – we were just given six months without mortgage payments, exclaims Maria Castellon, owner of Bench-Tek Solutions. The SBA was created to help small businesses and they have gone above and beyond to help us during this disaster.” 

About the SBA 504 Program 

SBA 504 loans enable a business owner to purchase, renovate, construct or refinance commercial real estate with only a 10 percent down payment. With the low down payment, businesses can retain precious working capital so the company can continue to grow. Renovations, equipment, closing costs and soft costs can be financed as part of the total project cost, and the down payment is only 10 percent of that total. 

The SBA 504 loan has a long term of 25 years and a fixed interest rate, fully amortized for the life of the loan — meaning no balloon payments. Monthly payments are fixed for the life of the loan, providing business owners with affordable payments that enable them to control overhead costs for the long term. Today’s SBA 504 interest rate is a remarkably low 2.4 percent for 25 years. 

The SBA 504 Programs Proves to be the Best Financing Option for Small Business Success 

Regardless of a national disaster, the SBA 504 Loan is the most advantageous financing solution available to small business owners looking to own their own real estate. However, the coronavirus pandemic has shed light on even more reason to go the SBA route  they will step in when disaster hits. 

Many small businesses will not be able to persevere through 2020 but many will. And many attribute their survival to the help from the Small Business Administration, combined of course with their ability to adapt and undying dedication to success.