TMC Financing: Smartly Invest in Your Business with an SBA 504 Loan
We’ve asked some of our #SFSBW2019 sponsors to share their insights, and how they help small business flourish in San Francisco. Today we hear from Amanda Near, Marketing Manager of TMC Financing.
TMC Financing‘s team of experts, a link between the public and private sectors, promotes economic development through job creation and business expansion by providing funding for small and medium-sized businesses in California and Nevada.
TMC Financing helps administer SBA (Small Business Administration) 504 loans. The SBA 504 Loan was specifically designed to help growing small businesses expand by purchasing fixed assets such as real estate. The biggest stipulation is that the real estate must be used by the business, a rule enforced to uphold the integrity of the program. A business must occupy at least 50% of the building in order to qualify for the 504 program, or 60% for newly constructed buildings. Most businesses that operate for-profit are eligible as long as they plan on occupying the building.
Ease of application process: Many business owners are pleasantly surprised with the SBA process in general. There are many misconceptions about how long it’ll take to get SBA financing and how much paperwork is required. The CDC can prequalify potential borrowers in 24-48 hours. Once the loan is approved by the commercial lender, the CDC submits the application to SBA. Today, all applications are submitted electronically to one central location and are approved by SBA in approximately 7 days. The documentation for the 504 application is generally the same as the documentation required by the first lender. The CDC underwrites the loan simultaneously with the lender.
Our job as a Premier CDC is to act as the borrowers’ advocate through the life of the loan. We guide each borrower through every step of the process. With over 38 years of experience navigating the SBA process, we know the ins and outs of the program so our borrowers and lending partners don’t have to.
Demand for SBA loans has consistently increased over time as the SBA programs gain visibility. While credit markets are cyclical, demand for SBA financing remains relatively stable throughout the cycle. Currently, there is plenty of available capital and the conventional lenders are eager to lend. During this market cycle, when the banks are flush with capital, SBA financing represents a small percentage of a large market. During a recessionary cycle, banks become more selective lenders, and SBA loans represent a larger share of a smaller market. During one particularly tight market in the early ’90s, almost every comp on the appraisals we submitted to SBA had been financed by an SBA loan.
In spring 2018, hotelier & TMC client Anil Patel—recognized the growing market and rising interest rates— he used the SBA 504 program to finance the $10.6 million purchase of a 34-room independent hotel in San Francisco for his franchise, Signature Inn and Suites. Thanks to the 504 program’s fixed interest rate and low down payment, Patel was able to expand his hotel portfolio in an ideal location in downtown San Francisco close to
many tourist attractions and public transportation. Read more on our blog!
Property acquisition through an SBA 504 loan is an accessible and affordable way to grow your hotel business and solidify your financial security later in life. The 504 program allows hotel owners to smartly invest in their business by either purchasing new facilities or making improvements to their existing ones.
Qualifying for a 504 loan is easier than you may think. In fact, most businesses in the US qualify, as long as they meet a few simple guidelines as a privately-owned business that operates for profit.