Similar to a craftsman in the woodworking world, I’ve always tried to analyze my design options before pulling out the financing toolbelt. There are many ways to build a beautiful piece of furniture, and considerations include overall dimensions, wood choices, and other materials options. The same approach holds true when laying out financing options for our business banking cients.
Visualizing the end product, talking through how the business operates currently, and carefully discussing risk tolerances and repayment capacity, all are part of a financing discussion that commercial lenders have with our clients on a regular basis. After several days of brainstorming and analysis, we like to then pull out the toolbelt and carefully construct a custom proposal. The SBA 504 financing option has been in my toolbelt forever, has been a sturdy and reliable tool, and I’ve relied on it for a dozen or more financing opportunities during my career.
In a nut shell the SBA 504 loan program is one of the few options for entrepreneurs to build a headquarters for their company with only a 10% down payment or capital injection. Other benefits of this program include 20 year fixed rate options, rates currently under 5%, and a longer committed term by the bank. This federal loan program is administered by WBD (Wisconsin Business Development Finance Corporation - https://www.wbd.org/504 ), a registered CDC (Certified Development Company), and I have found that teaming up with WBD makes the SBA paperwork maze easy to navigate.
Projects that I’ve financed over the years with this creative option include a fitness center, a large hotel, national chain restaurant, recycling center, AD agency worldheadquarters, and a growing distribution business. For most companies the common denominator has been steady growth in their business has tied up a lot of their working capital, limiting their ability to put 20% down towards a new facility.
The most challenging project I’ve worked on over the years involved back-to-back SBA 504 loans, with a NMTC (New Market Tax Credit) financing piece in the middle of the puzzle. Over a 3 year period I helped this entrepreneur build their world headquarters, add on twice, while at the same time managing sales growth in the double digits. As a lender it is extremely rewarding to work closely with a business that is on the rise, and in this particular case the SBA 504 financing option truly helped me to craft a winning result.
When I show up at a client meeting to discuss their growth and expansion challenges, I like to keep the SBA 504 option handy, and for sure I’ve found it to be a reliable idea for many of our bank cients.