Money Is Available for Small Businesses
May 9, 2008 – The current economic downturn has caused the misperception that there is little or no money available to small business owners. However, institutions such as the Small Business Administration (SBA), continue to offer a wide range of financing options to small business owners. Availability of SBA loans and criteria for receiving these loans have not been affected by the economy. In fact, one local SBA lender that offers loans specifically for the purchase of owner-user commercial real estate through the SBA 504 loan program has seen an increase in loans financed. Barbara Morrison, President of TMC Development, says, “Our loan approvals are at a record high. The SBA has money to loan, and many small business owners find that owning their building helps reduce expenses and locks in ongoing operating costs, two very important factors for running a small business in a weak economy.”
Despite the common belief that small businesses fare poorly during an economic downturn, TMC Development’s SBA 504 loan volume indicates that this is not the case. With a 13% increase in loan approvals for the past 6 months over the same period last year, the SBA 504 loan program is definitely thriving. One TMC client, Sammy Yu, owner of Premier Protective Films International in Fremont, tells his story. “We had so severely outgrown our leased space that we were being forced to turn away business. We didn’t think we could afford to own real estate, but finding out about SBA financing and getting an SBA 504 loan from TMC allowed us to actually buy a condo with triple the square footage and also stabilized our expenses for the long term.” Additional benefits of SBA 504 loans include a low 10% down payment, longer repayment terms of 20-40 years, and a low fixed interest rate, currently at 6.38% for 20 years.
Michael Lloyd, Senior Vice President of Colliers International and President of SIOR’s Northern California chapter, says it is an opportune time for small businesses to negotiate deals for owner-user commercial real estate since there are more properties on the market now than there have been in years. “Now is a great time to purchase property because interest rates are low and inventory is high. By taking advantage of the SBA 504 loan program, small business owners can lock in occupancy costs for the life of the loan, a major advantage.”