When Bill and Leila Hall founded their home-based business featuring a line of affordable frozen foods, they didn’t anticipate one small problem – overwhelming demand. Within just a few years they knew they had to expand or fail. The latter wasn’t an option for the determined owners of Hart Food Products, so they turned to the SBA for financing.
“Thanks to the SBA 504 program, we exist. They saved our business,” said Bill. “It was exactly what we needed at the time, and more than a decade later we still turn to them for assistance.”
The SBA 504 loan program is a valuable financing option for any business owner looking to purchase owner-occupied commercial real estate with a below-market, 25-year fixed interest rate. There are also two outstanding features of the loan program that the Halls took full advantage of:
- SBA 504 loans can be used to finance new construction and equipment purchases
- Qualified 504 applicants can also have multiple SBA 504 loans
“We’re doing it all,” said Bill. Founded in 2006 with a small footprint and minimal equipment needs, the Halls outsourced their food processing and packaging requirements while managing operations from home. But by 2009 they had to make the move to owning and operating their own USDA-approved food processing facility, a $960 million step. A small sign of things to come.
Hart Food Products Secures Multiple SBA 504 Loans
Hart Foods Products needed space to house equipment and optimize production. They recognized it was time to stop outsourcing and purchase a building for their business.
Fortunately, the Halls discovered TMC Financing’s SBA 504 Loan Program.
In 2009, the Halls secured their first SBA 504 loan that financed the acquisition of a 6,500-square-foot property in Paramount, CA.
With their operations and equipment relocated to this new space, production soared. Nearly 6 months later, the Halls closed on their second SBA 504 loan, which allowed them to purchase an adjacent property – adding an additional 3,000 square feet.
John Rockwell, TMC Financing’s vice president of business development, explains, “The 504 program was the perfect solution for the Halls. They now have the long-term security of property ownership and the stability of predictable occupancy costs.”
Bill remembers the relief he felt to finally have a stable operating location for his business. “I was glad that I connected with TMC Financing because other banks wouldn’t give us a loan, but the SBA did.”
SBA 504 Program for Equipment Purchase
The SBA 504 Program also allows business owners to finance equipment and other fixed assets, with only a 10% down payment. In 2020, the Halls took full advantage of an SBA 504 equipment loan and purchased new machinery.
“Our production was maxed out, that’s how well we were doing,” said Bill. “We couldn’t grow anymore because our machinery was limited. TMC helped us buy new equipment, and that tripled our output.”
Now, Hart Food Products is sustaining its highest daily output ever.
“With new bagging and scale machines, our pack line is worth almost as much as the entire building,” continues Bill. “We’re to the point now where we’re planning to add another pack line, including another machine and it’s all thanks to the SBA 504 loan program and TMC Financing.”
What would Bill tell other industry professionals about the SBA 504 loan program?
“If you’re not taking advantage of the 504 Program, you’re missing a phenomenal opportunity. We are already looking at securing a 4th SBA 504 loan to expand to another location. The interest rates are better, the down payment is lower, and it is a better experience through and through.”
Contact TMC Financing today to find out more or get started.