“We leased this property for a long time and when the owner was finally ready to sell, we knew it was a great opportunity,” says Steve Eberhard, a majority owner of Eberhard Equipment in Santa Ana, CA. Eberhard Equipment has been in operation since 1945 and in its current location since the 1970s. Here’s how TMC Financing helped Steve and co-majority partner, Rosendo Alejandre, secure great terms with an SBA 504 loan – 10% down and a 25-year amortization with a fixed interest rate for the life of the loan – for the $8.6 million deal.
Eberhard Equipment specializes in agricultural equipment, including Kubota tractors and Jacobsen mowers. The company has occupied the nearly 10,000 sq. ft. building, which sits on approximately two acres, since 1977. The business has nearly two dozen employees, including many who have been with the company for decades and who are also employee-owners.
TMC Financing is presented as the preferred SBA 504 lender
“Before the previous owner had decided to sell, we’d begun looking at other properties in our area. That’s when our real estate broker, Greg Diab of Lee & Associates, told us about TMC Financing and we had conversations with TMC’s Business Development Officer Jennifer Davis early on,” Steve says. “When we looked at all our financing options, the SBA 504 program had clear advantages, so we were ready to move forward with that if we found the right property. And, fortunately, the previous owner decided to sell at exactly the right time for us.”
The SBA 504 loan program’s terms seal the deal
“We were fortunate because we had a long-term, below-market rate lease, which meant that we were able to negotiate a more favorable sale price,” Steve explains.
This was a key factor in the sale, as industrial property valuations have skyrocketed in Santa Ana. In addition, the 10% down payment requirement that’s standard with most SBA 504 loan deals was also a game-changer, compared to typical down payment requirements of 20-30% (or more) for similar commercial properties when purchased with conventional commercial mortgages or through private lenders.
SBA 504 loans are made in conjunction with the borrower, a commercial bank and TMC Financing for the SBA portion of the loan. Eberhard Equipment’s long-time commercial bank, Partners Bank of California, partnered on the SBA 504. Here’s what that might look like for a deal such as Eberhard Equipment’s:
- Borrower down payment: $860,000 (10%)
- Conventional loan (bank portion): $4.3 million (50%)
- SBA 504 loan portion (TMC Financing): $3.44 million (40%)
Steve says that the loan experience went well, too, adding, “There are bumps in the road with any deal of this size and complexity, but we had support from the bank and, especially, with TMC Financing. Jennifer was great, always available, responsive, and knowledgeable. Even now when questions come up, she’s right there to help with whatever we need.”
He explains that even with the beneficial purchase price they could negotiate because of the lease terms, there are California-specific property regulations, like a Prop 13 assessment increase, that made great loan terms important. He says, “Although our current payment is higher than our lease payment alone was, now we have stability, we’re building equity and because of the SBA 504 program’s 25-year amortization and fixed-rate terms, we can plan for the long run.”
Business owners: Explore the SBA 504 loan program with TMC Financing
“As business owners, we have to consider all options when purchasing commercial property,” Steve says. “My advice is to get in touch with TMC Financing and explore the SBA 504 Loan Program. Their knowledge and experience make all the difference both in terms of the process and for your overall experience.”
If your business is located in TMC Financing’s service area of California, Arizona, Nevada, and Oregon, contact us to find out more and to get started with the SBA 504 loan program. And if your business is located outside of our service area, try the SBA’s Lender Match tool to find a qualified certified development company (CDC) lending partner near you.
About TMC Financing
Founded in 1981, TMC Financing is the leading provider of SBA 504 commercial real estate loans in the nation, funding projects worth over $12 billion across Arizona, California, Nevada, and Oregon. Over 6,000 businesses have benefited from this financing, resulting in the creation of an estimated 60,000 jobs. Learn more.