Fueling the success of small business: #SFSBW2015 Interview with TMC Financing
#SFSBW2015 asked our sponsors to share insights, best practices, and examples of how they help small business owners flourish. Today we hear from Rich Grant, Executive Vice President of TMC Financing.
What is your company’s mission?
We exist to better our communities by fueling the success of small business, like you. We do this by providing U.S. Small Business Administration commercial real estate financing to secure the long-term success of your business – when you succeed, we succeed.
Today’s hyper-competitive marketplace is presenting new challenges and opportunities to many businesses. Has your company changed its approach to doing business to address the changing market?
In our 30+ years, TMC Financing has witnessed a lot of economic cycles. With SBA lending, when the economy is expanding there are more competing sources of capital: conventional lenders, investors, available cash. With more money chasing fewer deals, we end up with a smaller piece of a big pie. When the economy contracts, the total pie shrinks, but the need for SBA-guaranteed financing is a larger piece of that smaller pie.
What is your company doing to help small businesses compete in today’s market?
TMC provides SBA-guaranteed funding, primarily through the SBA 504 program, which allows small and mid-size businesses to build, buy or renovate commercial real estate. If you own the business, owning the building brings a lot of advantages. First, of course, is that you have to write a rent check to someone, it might as well be to yourself.
Owning allows you to stabilize your occupancy costs and build equity. No longer are you at the mercy of your landlord, facing rising rents or relocation, which can be very disruptive.
In today’s Bay Area real estate market, owning can be cheaper than leasing. And it gives you more control over your space. You can make changes that really improve the efficiency of your business.
At the end of the day, owning means you have an asset that can fund business growth, your retirement or even a legacy for future generations.
And the 504 loan program has the lowest up-front costs. Less money down means more cash available for operating costs and projects that fuel your business growth.
What are the trends you see when you think about the small business marketplace, and how will these trends shape the future of small business?
On the broadest level, the continued push toward the paperless/online/digital future is obviously a major influence. Not only does it change how business gets done, but at a deeper level it changes expectations. Small businesses have to deliver to those same right-now, always-on, 24/7 access demands, with a lot fewer resources.
Can you share one brief story about how your company is helping San Francisco businesses thrive?
Over the years we’ve helped a lot of SF businesses finance permanent locations in the city. Iconic hotels, restaurants, bookstores…you name it. We recently funded a purchase and renovation project for humangear, a design-centric consumer products firm. They had been leasing and were looking for room to grow and a space that they could give them more control of their environment. Owner Chris Miksovsky had been looking for the right space for a couple years.
They are design-focused, so they wanted a space reflective of that ethos. And Chris understood that San Francisco is an active market so it makes sense to invest in owning if you plan to be here long-term. They found a space a year or so ago, but the deal fell through.
So when a unique office space in the Upper Haight came available, he was ready to go with a prequalification letter in hand. He said he thought that having the financing in place made a difference because the sellers had another all-cash offer.
humangear makes simple, functional products designed to make everyday life a little more enjoyable. A sister company, Pawwgear, makes smart, delightful products for dogs and their humans. These are exactly the kinds of innovative, local, successful small businesses help make this city so unique and the SBA 504 program makes that diversity possible.
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