“SBA 504 loans are great for small businesses,” says Dr. Sergio Pereira, DVM, owner and managing partner of Azores Veterinary Practice, along with his wife, Dr. Maria Rodriguez. In 2021, he purchased a 12-acre site to expand the practice and services, using an SBA 7(a) loan. Here’s why he refinanced that loan to an Préstamo SBA 504 with TMC Financing and Seacoast Bank.
Building a practice from the ground up
Dr. Pereira’s veterinary practice, based in Turlock, CA, has been steadily growing since he launched a private practice in 2012. He focuses on agricultural animals – including cows, horses, sheep, goats, and pigs – but at that time, his work was primarily ambulatory, spending his days, and many nights, going directly to clients’ farms. He also worked with third-party practitioners for pharmacological needs and lab work.
“I wanted to have my own location,” Dr. Pereira says, “so that I could offer a fuller range of services within our own facilities. At the same time, my family was growing, and it was important to me to gain more control over my time and future direction.”
To achieve this meant finding a property that could accommodate areas for preventive medicine, reproductive services, lab work, consulting services, on-farm training, emergency services, and more.
An opportunity to achieve his vision
In 2020, Dr. Pereira had an opportunity to purchase 12 acres of land at 11910 Youngstown Road in Turlock. Ground-up construction, completed in 2021, included a clinic, a hospital, a pharmacy, a lab, a barn and corrals, and more. Today, the veterinary campus buildings total nearly 8,000 square feet with room for future growth.
To accomplish this, he took out an SBA 7(a) loan. This loan is a popular financing solution for many small businesses and for Dr. Pereira, it enabled him to build his practice to meet his vision.
However, for large-scale projects that include commercial real estate for a business’s use, it’s not always the ideal solution for the long run. That’s because the SBA 7(a) includes an interest-rate reset, which makes payments less predictable over time and, often, significantly higher, which can strain cash flow.
In Dr. Pereira’s case, that meant that reset from a low rate of 4.25% to a much higher variable rate of about 8.5%, which significantly increased his monthly payment.
For Azores Veterinary Practice and Dr. Pereira, there was a better option.
The SBA 504 loan for refinancing higher-cost debt
Dr. Pereira has a long-term relationship with Jennifer Mills at Seacoast Bank. “She’s helped us so much over the years, and when I wanted to learn about refinancing options for the SBA 7(a) loan, I reached out to her. She recommended the SBA 504 and TMC.”
SBA 504 loans are made in partnership between the business owner, the bank, and a certified development company (CDC), which is an SBA-certified lender specializing in SBA 504 financing, like TMC. The SBA 504 is a great option for small business owners who want to purchase, renovate, or refinance commercial property for their businesses because it offers:
- A down payment of only 10% for most projects, which is significantly less than the 30-40% that’s required for conventional commercial mortgages.
- Generous funding limits, which can be from $50,000 to $5.5 million for the SBA 504 portion, with no maximum for the first mortgage. TMC has financed projects valued from $500,000 to $44 million.
- A 25-year term for most projects with a fixed interest rate for the life of the loan. This makes payments predictable while stabilizing occupancy costs for decades.
For Azores Veterinary Practice, the deal totaled $2.6 million for a full refinance and to gain about $200K for eligible business expenses to support operations. In addition, the refinance improved the practice’s monthly cash flow by more than 20% while providing stability, predictability, and long-term affordability.
Dr. Pereira worked with TMC SVP Jim Azevedo on the refinancing deal. About working with TMC, Dr. Pereira says, “It was all good! The process includes a lot of paperwork and communication with the lenders, but that’s to be expected for commercial real estate deals, including a refinancing project like mine. And Jim and the other representatives from TMC and Seacoast bank were outstanding. They helped it all to go smoothly.”
About TMC’s contribution to making this refinance a success, Jim says, “A lot of small business owners don’t realize all the benefits of the SBA 504 loan program, including using it as a refinancing option. In this case, Dr. Pereira was able to refinance higher-cost debt while his practice gained operational support. It’s a win all around and we’re really glad to help. We value our bank partners for recommending TMC and partnering with us on the SBA 504 program.”
Today, Azores Veterinary Practice has more than a dozen employees, including six veterinarians, vet techs, lab technicians, administrative staff, and more.
TMC and the SBA 504: Strengthening small businesses
Dr. Pereira has plans for further growth, too. “And I’ll definitely go back for another SBA 504 loan,” he adds. “Every small business owner should know about them.”
If you’d like to learn more about buying owner-occupied commercial real estate for your small business, TMC can help. To learn more, contact us today.
Acerca de la financiación de TMC
Founded in 1981, TMC Financing is the leading provider of SBA 504 commercial real estate loans in the nation, funding projects worth over $14 billion across Arizona, California, Nevada, Hawaii, and Oregon. Over 7,000 businesses have benefited from this financing, resulting in the creation of an estimated 60,000 jobs.