Growing an Architectural Firm with an SBA 504 Loan

Your architectural firm is growing, it’s what you’ve been working so hard for since the day you started it. So why is it so difficult to find a financing option that fits the needs of your architectural firm while offering competitive loan rates as well? Unfortunately, architectural firms are somewhat misunderstood when it comes to standard financiers.

If you are looking to relocate into a building or even design and build your own, your best financing option is to investigate an Small Business Administration (SBA) 504 loan. And to maximize the amount of financing you are eligible for, consider incorporating energy efficiency into your designs by going green.

Two Reasons Your Architecture Firm Should Consider Going Green

There are two good reasons your architecture firm should consider going green. First, architecture as a whole has begun to explore new green strategies in their designs. Going green in your own building will not only keep you competitive in an expanding marketplace, it will highlight your commitment to energy efficiency. Second, by going green you could increase the amount of money you get for your growth project when you apply for an SBA 504 loan.

Reason 1: Green Buildings Are The Future Of Architectural Design

Over the past decade, architectural design has incorporated more eco-friendly, green initiatives into their overall plans. This necessary trend doesn’t seem to be slowing down any time soon. Here are the four ways in which architects are using new green strategies in their designs.

Timber  

Timber is now engineered to be stronger than ever. Cross-laminated timber is created by gluing together three to seven sections of wood at a right angle. The result is a strong material that can be used to create large structures. Timber is lighter than steel and concrete as well as being better for the environment. Timber also soaks up carbon, while steel and concrete emit carbon into the environment.

Bamboo

This highly sustainable material can grow by up to four feet per day, and can last twice as long as steel. Bamboo releases 35% more oxygen when it is growing and absorbs roughly 35% more carbon dioxide than trees. Bamboo can be reused several times in multiple projects which makes it a valuable material for builders.

Recycled Materials

Materials like cardboard, plastic bottles and scrap metal can now be used to reduce the overall carbon footprint of a building project. They can be used on both the exterior and interior of buildings. The recycled material produce less carbon and in some cases it can also be melted down and reused but no more than one time.

Self-Sustaining Concrete

Scientists are working on creating a new concrete that will last longer and be more eco-friendly than current options. The new concrete could help to reduce carbon emissions by preventing a need for infrastructure improvements. The proposed concrete mix would use bacteria as a way to heal cracks organically. It would release capsules of sodium silicate from inside the material, it would then break open when a crack forms to heal and seal the concrete. Concrete contributes around 5% of global carbon dioxide emissions, this new mix would last much longer and therefore reduce the long term carbon footprint.

Reason 2: The SBA Green Energy Program Means More Money

Incorporating these or other sustainable elements into the design of your building will not only benefit the earth, it will benefit you as well. By committing to an eco-friendly construction or renovation process, you can to qualify for  the Green Energy Program.

When the CDC facilitates a separate SBA loan of 35% of the total loan, you can receive up to $5.5 million if your project is eligible for the SBA’s Green Energy Program. The guidelines are fairly flexible and leave room for lots of creativity:

  • Buy or construct a building that consumes 10% less energy than your current location
  • Buy the building you now lease and make upgrades to consume 10% less energy
  • Buy or construct a building that produces 10% of the energy it consumes or produces fuel to reduce fossil fuel consumption, using equipment financed through the loan

Growing an Architectural Firm with an SBA 504 Loan

As the owner of an architectural firm, you have likely found the need to seek out other financing options outside of traditional banks and brokers. The 504 loan program can help you address that financing need.

The 504 loan provides affordable financing for architectural firms looking to grow and encourages lending by conventional lenders (banks and credit unions) by providing them with low-risk conditions. The 504 loan program partners a nonprofit Certified Development Company (CDC) like TMC Financing with a conventional lender to provide a loan in three parts:

  • The first is a  loan from a conventional lender—a bank or a credit union—for 50% of the total project cost. The amount and conditions of that loan are determined separately, and it becomes the first mortgage. TMC can help match your architectural firm (the borrower) with the perfect banking partner for this loan, if requested.
  • The CDC facilitates a separate SBA loan of 35% of the total at a fixed, below-market rate. This is the second mortgage.
  • The architectural firm owner (the borrower) contributes 15% to the loan as down payment.

The 504 loan has a 10, 20, or 25 year term, and  is fully amortized (so there are no balloon payments). A 504 loan can be used to:

  • purchase land or buildings for your architectural firm
  • construct, improve or upgrade architectural firm buildings
  • purchase equipment with a service life of ten years or more
  • refinance conventional debt

A 504 loan is flexible enough to finance your growing architectural firm, and the SBA Green Energy Program can increase your financing and your positive impact on the environment.

You can find out more about 504 loan financing and the Green Energy Program from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.

Jim Azevedo

Jim Azevedo is Senior Vice President of Business Development for TMC Financing, focused on serving small business clients throughout the greater Sacramento area. Jim is responsible for partnering with Lenders and Brokers throughout the Sacramento region to guide small and mid-sized business owners through the SBA 504 lending process. Jim joined TMC Financing in 2012, which is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs.

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