“When clients need expertise in land-use and real estate law, they turn to us,” explains Jason Morris, partner at Withey Morris Baugh, PLC, in Phoenix, AZ. “And when we needed expertise in SBA 504 financing for our real estate project, we turned to the team at TMC Financing to get the job done.”
Here’s how TMC Financing helped the firm acquire a former restaurant and renovate it into their dream office using an SBA 504 loan.
A dream more than a decade in the making
Prior to moving into their new home at 2113 East Highland Avenue in Phoenix, the firm leased space in a multi-tenant office building for years – but they’d long had other plans in mind.
“It was our goal to secure our own office near the Arizona Biltmore,” Jason says about the site the firm eventually secured for their office. “It took more than a decade, though, because this part of the Valley district is at a premium.”
In a fortunate turn of events, a property became available through a client of the firm.
“It was a former restaurant and it was hard to envision what it could become, but we worked with an amazing architect, Hayes McNeil of Plus Minus Studio, who also served as general contractor and even designed furnishings for the space,” Jason explains.
Closing on financing for the deal took a little more legwork, though.
TMC brings the expertise needed
Jason says that through research, they found the SBA 504 loan program. “It looked like everything we needed, with a sound process and great terms,” he says. He also admits that before connecting with TMC, his firm had started working with another certified development company (CDC) – organizations that are approved by and work in partnership with the U.S. Small Business Administration (SBA) and banks on SBA 504 financing.
“It became clear that we needed a more experienced team to get our project financed,” he says. “We did more research to determine which CDC had closed the most deals and had the kind of project experience we needed. TMC became the clear choice.”
SBA 504 loans for acquisitions, construction, and renovations
The SBA 504 loan helps small business owners purchase, renovate, and construct commercial properties for their businesses. They’re made in partnership between the business owner, a bank, and a CDC, like TMC. It’s a great option 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. With a total project cost of about $3.93 million, this meant that the Withey Morris Baugh project required a down payment under $400,000.
- Generous funding limits 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 SBA 504 projects with a fixed interest rate for the life of the loan. This makes payments predictable and more affordable while stabilizing occupancy costs for decades.
For these reasons and more, the SBA 504 is the ideal financing option.
TMC Financing: Getting the job done right
Jason says that once they connected with TMC SVP Chris Bane and TMC Business Development Associate Denise Garcia, the rest of the process was easy.
“The communication and guidance we got from Chris and TMC were excellent,” Jason says. “Just as our firm is very specialized, you come to realize that it only makes sense to go with TMC, when they have such depth of experience. It really speaks to the difference that a specialized team makes. With the right people in place, the SBA 504 loan process becomes smooth and straightforward.” Their experience is one of the reasons that the TMC Arizona team is the leading SBA lender in the state.
Jason also acknowledges that, on the firm’s side, much of the credit is due to their office manager, Lindy Gosnell. “Lindy is meticulous and organized and kept things flowing smoothly. We’re grateful to have her as part of our very talented team.” That team also includes seven attorneys, three land-use and planning experts, and four additional administrative staff.
SVP, Business Development
About this project and working with the Withey Morris Baugh firm, Chris says, “It’s always enjoyable when we can help people achieve their commercial real estate goals for their businesses. This project – a repurposed restaurant that’s right in my neighborhood – was particularly interesting for me and it has been exciting to see it evolve into this incredible new space. And when we get to work with a team of people that are also motivated, visionary, and informed, it makes it even more satisfying. The firm’s new office is spectacular and TMC is thrilled to have helped this deal come to fruition.”
The entire acquisition and renovation project took about 12 months to complete.
“Gaining the financial benefits of property ownership is great, of course,” Jason says. “We’re building equity with a property in a premium location that will increase in value. Those things are important for long-term security. But really, it’s the pride of ownership – knowing that we’ve created something amazing – that makes it all worthwhile.”
TMC and the SBA 504 loan: Focused on small business success
“The SBA 504 is great for small businesses that want to own their commercial property,” Jason says, “but I can’t stress enough how important it is to have the right team working with you. Chris and TMC brought this project home and our entire firm is thrilled at the result.”
If your business is located in our service area of California, Arizona, Nevada, Hawaii, and Oregon, contact TMC Financing to get started. 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
TMC Financing is a nonprofit 501(c)(4) Certified Development Company (CDC) with a mission to promote economic development and job creation by helping small businesses access affordable financing. Since its founding in 1981, TMC has provided approximately $16 billion in SBA 504 commercial real estate financing to over 8,000 small businesses across Arizona, California, Hawaii, Nevada, and Oregon. These efforts have helped create more than 63,000 jobs. TMC is recognized as the #1 SBA 504 lender in the nation, offering long-term, fixed-rate financing that empowers small business owners to purchase, construct or refinance real estate and major fixed assets to grow their operations.