The SBAs Savviest Program

Forget everything you've ever heard about the U.S. Small Business Administration (SBA). The negative connotations may have been warranted in the past, but the SBA is different these days. The SBA is worth every penny of its more than $22 billion budget on the basis of a single program alone: the SBA 504 Loan Program for small business owners who want to acquire or develop their own facilities.

In fact, SBA 504 loans may rank as one of the most effective domestic economic development programs the federal government administers.

Lots of entrepreneurs ?? and far too many bankers, ironically ?? dismiss the SBA on the basis of its 7(a) lending program that always seems to need supplemental appropriations by the U.S. Congress.

The 7(a)'s reputation may or may not be deserved, but some of its negativity has managed to soil other truly effective SBA programs.

SBA 504 loans, by contrast, are a dynamo. They work; they work well; and unfortunately by some of the historical problems in the SBA's 7(a) program, a dark shadow has been cast over 504 loans causing not many people to know about them.

In fact, for too long, I have heard many otherwise knowledgeable lenders dismiss SBA 504 loans based on faulty and out-dated information.

I've been providing SBA 504 loans for more than eight years. Over two years ago, I founded Mercantile Commercial Capital, LLC to focus exclusively on providing 504 loans, and we're still the only lender nationwide to primarily do this. To date, we've closed more than 60 loans worth a total of more than $67 million in only 30 months of business. We offer other financing options too, but SBA 504 loans are by far our most popular and most rewarding program.

So far, every qualified 504 loan proposal we have submitted to the SBA has been approved and funded, or is soon to be funded.

The SBA knows the 504 is a hot property. Funding has grown about 22 percent a year since 2000. Last year, 504 loans helped fuel about $10 billion in total capital investments for 8,000 small businesses throughout the U.S. In fact, these loans helped create about 75,000 new jobs last year through the "equity savings" small business owners experienced.

Entrepreneurs, real estate brokers and accountants are gradually waking up to the fact that 504 loans were designed to level the playing field for small businesses in the marketplace. With 90% loan-to-cost financing of most commercial real estate projects, 504 loans are very powerful.

For the borrower, SBA 504 loans offer long-term, below-market, fixed-rate financing at better terms than are available from any private sector lender. And if that wasn't good enough, borrowers generally put half as much money down for 504 loans, which enable them to grow their businesses a lot faster. For every $50,000 of SBA guaranteed funds, small business owners need to create or retain one job in the next two years. It is in this way that 504 loans have become an engine for economic growth in America.

Lending amounts are generally not capped or limited and only non-public, for-profit businesses qualify. Three financial qualifications, however, set some limits: the borrower's small business must have a tangible net worth under $7 million; the operating company's net income for the previous two years must average less than $2.5 million annually; and the borrower cannot have liquid, non-retirement assets greater than the total project amount.

Most small businesses have no trouble meeting these qualifications. In fact, over 98 percent of all businesses in Florida, for example, qualify for SBA 504 loans.

What sorts of businesses make the most appropriate SBA 504 loan candidates? We see an extraordinary number of service professionals (physicians, attorneys, accountants, etc.), and we also finance plenty of franchisees, manufacturers and distributors. But in truth, any business with a track record or at least some solid, related experience is an appropriate SBA 504 loan candidate. The 504 Loan Program collateral requirements are generally limited to the commercial real estate facility that the loan finances, and approvals and closings happen in days and weeks, not in multiple-months as it was in the past.

Historically, the SBA was usually considered a lender of last resort. But compared to ordinary commercial financing, 504 loan terms and conditions are so good that for almost every small business, an SBA 504 loan should rank as their top choice.

Bankers have any number of reasons they've dreamed-up why not to consider SBA 504 financing and, to be candid, I'm okay with that. It just means we'll be here to help a lot more small businesses grow with our focus on the SBA's savviest program: 504 loans.

* * *

www.mercantilecc.com

Chris Hurn is President and Chief Executive Officer at Mercantile Commercial Capital, LLC, a leading provider of SBA 504 loans for business owners.

Chris actively participates in, among other things, the business development, underwriting and marketing functions of MCC. Previously, he worked as a senior management consultant, financier and executive with companies such as GE Capital, Heller Financial and NAI Realvest Partners. He has advised, financed and helped many small to mid-sized businesses throughout Florida and the Northeast for over ten years.

---

Mobile Detailing Expansion Considerations

Expanding your business requires you to take a good hard... Read More

Creative Marketing Tips: Simple Things You Can Use In Your Business To Attract More Clients

The single most important activity you can do in your... Read More

Small Business - Is The Accounting Profession Ripping Them Off?

My 16 year-old daughter said, "Gee Dad! You look just... Read More

Restaurant Operators - What Skills do you Need

A tongue-in-cheek look at the skills required to operate a... Read More

Naming Your Business: 3 Tips To Ensure Success

If you are just starting your business, or if you... Read More

Buying a Franchise

Buying a franchise is not for everyone. This guide will... Read More

Mobile Carwash; Senior Citizens and Mobile Homes

Senior citizens are generally not a large marketing segment for... Read More

432 Page Franchise Report by the FTC

The Federal Trade Commission is upgrading the franchise law and... Read More

Find Your Niche & Follow It - Part 1

In this series of articles I'm going to show you... Read More

11 Benefits of Starting a House Cleaning Business

One of the biggest fears people have about starting a... Read More

Why are Reverse Mergers Often the Victims of Short Sellers?

There is a great deal of abuse going on in... Read More

Why Small Businesses Fail (or Fail to Thrive)

Tammy, a skilled and gifted horticulturist, called me to discuss... Read More

A Day in the Life of a Self Employed Professional

It's Monday morning and Connie the Consultant sits in her... Read More

Small Business Planning -- Three Myths

Are you -- like 70 percent of small business owners... Read More

Carwash Franchisor Case Study

There are only a handful of car wash franchises in... Read More

Business Checks are an Added Cost to Your Small Business - Try Making Them Yourself!

Starting and managing a small business is no fun chore,... Read More

Franchise Buyers from Hell

I ran a franchise company for many years, a car... Read More

S Corporation ? What Is It?

For many small businesses, the "S" corporation is the business... Read More

Personal Success - Take a Break from Business

Have Some Time to Yourself One of the most important... Read More

Business Relationships Defined

What makes a business relationship?What really makes a business relationship?... Read More

How to Effectively Design Your Business Image

In many industries, image is one of the last things... Read More

Is Your Business Legally Prepared?

It is imperative to have your business legally prepared. How... Read More

Tracking Revenue For MORE Profits

The revenue history is a vital piece of your power... Read More

What is Rule 15c211 and Reverse Merger

Rule 15C211Under SEC Rule 15C211, a U.S. securities broker or... Read More

Wichita KS; Anything is Possible in Wichita Business

Just when the entire state was kissing Wichita goodbye, economically... Read More

How to Successfully Avoid Becoming One of The 80% of Small Businesses That Will FAIL

It's a commonly quoted statistic: 80% of all small businesses... Read More

Using Excel Payroll Sheet to Make Payroll System Easier

For the employees, payday is the brightest day; they finally... Read More

How to Create an Employee Manual

Large corporations use employee manuals to both educate employees about... Read More

Do You Love Food? - Then Maybe Opening a Restaurant is Not Such a Crazy Idea

The restaurant industry in the United States employs an estimated... Read More

Expanding A Mobile Car Wash Business

What is the best time to expand a mobile car... Read More

Expanding Franchisee Advice

Franchisor expansion policies are not as simple as one might... Read More

10 Ways to Start a Business on a Budget

If you've been thinking about starting a business, but are... Read More

Private Investigator Tactics

A Private Investigator is a professional trained in the art... Read More