Funded by the University of North Carolina and the Small Business Association (SBA), SBTDC offers a wide range of resources and help—all free of charge—for developing small businesses. McAllister compares the organization’s role to the classic “teach a man to fish” proverb, adding, “Our primary purpose is that of education. We can’t do the work for you, but we can teach you what needs to be done and guide you on your journey.”

In fact, SBTDC offers an impressive and comprehensive range of services all designed to advance the small business owner toward success.  Services included:

• Providing small business expertise
• Offering training and education for business startups
• Assistance for economic developers and communities
• Business and management advice
• Financial analysis
• Marketing and PR assistance
• Strategy development and implementation
• Help with leadership and employee performance

Upcoming events include a seminar on “Becoming an Investor-Ready Entrepreneur”, “Government Procurement Events”, “NxLevel Business Planning for Entrepreneurs”, “QuickBooks Seminar”, and “Export University 101” (a one-day workshop on export sales, finance and logistics solutions.  For information on all of these events and more are available on the SBTDC website.

The SBTDC works closely with BEFCOR on a regular basis helping clients seeking funding to determine if qualifying requirements can be met and then to gather the necessary documentation and materials to apply for a BEFCOR 504 loan. McAllister says around 85% of their clients come seeking small business funding and they can be a tremendous asset helping business owners develop cash-flow projections and sound financial strategies.

SBTDC’s staff of professionals provide an unparalleled wealth of real world experience and knowledge as many have been successful small business owners in their own right.  The services are again, free of charge, and all work with all clients is 100% confidential.  It’s a resource that business owners can feel confident with and frankly, would be wise to engage. They are indeed steering North Carolina’s businesses toward a better future. Visit their website at www.sbtdc.org.

Fortunately, through an associate Brank and his business partner, Dave Wilks, discovered BEFCOR.  Although they didn’t realize it at the time, their business was about to change greatly — and all for the better.  As Brank said, “I can’t say enough about how great BEFCOR is!” Brank and Wilks now own the beautiful facility they’ve been leasing for years.  “I didn’t think something like this was possible in the current economy, but my BEFCOR rep, Jean Moody, never gave up on us and worked diligently to get the deal done,” says Brank.  And while he had been sitting on an SBA loan approval for several months, he had been having difficulty finding a bank to act as a lending partner. But BEFCOR’s Moody was relentless in her search and ultimately teamed with Capital Bank to close the deal.

Along with the great sense of freedom that comes with “not being beholden to anyone,” Brank says the biggest plus has been the substantial improvement in cash flow noting, “We can own much cheaper than leasing.” The BEFCOR loan has provided great relief in Brank’s operating costs and the future looks very bright indeed. That’s important to the Cheshire Fitness and Racquet Club because as Brank says, “We’re in it for the long haul. We plan to be here a long time.”

Maybe best of all, the change at the beloved fitness complex hasn’t been lost on its community. To celebrate the purchase of the facility, Cheshire Fitness held a free cookout for members and their families, many of whom personally expressed their personal congratulations and joy to Brank and his staff. Overall Brank says the experience was a great one and he would highly recommend BEFCOR to any business owner looking to purchase business real estate.

Louis Rogers, III, Business Development Officer for BEFCOR, was recently invited by Fidelity Bank, headquartered in Fuquay-Varina, N.C. to meet with their bankers and management to discuss the SBA 504/CDC Loan Program and temporary program for commercial real estate refinancing. BEFCOR partners with private lenders to provide long-term, fixed-rate financing to business owners, enabling them to own instead of lease their commercial real estate and other fixed assets. Louis heads up BEFCOR’s Raleigh office.  

The launch by the SBA of a temporary refinancing program in February has also piqued interest. The SBA is allowing loans with any maturity date to be eligible for debt refinancing under the temporary 504 Refinancing Loan Program.  Initially, SBA restricted applications to loans with a maturity or balloon date on or before December 31, 2012.  They soon determined that demand was limited and removed the restriction.  Visit www.BEFCOR.com/bankers/ for more information about this program.

Louis has over ten years of experience in the small business commercial lending industry and brings considerable knowledge of other resources available to assist small business owners seeking to grow and expand their operations. He oversees development and processing of new commercial SBA 504 loans in the Triangle, N.C. region, one of the fastest growing markets for small business owners in the U.S.

Richard Bargoil, CEO/Executive Director of BEFCOR was recently interviewed by the Charlotte Chamber for an article discussing the SBA 504/CDC loan program and the new, temporary refinancing program. In the article, Richard explains how SBA 504/CDC loans work,what type of business/properties mortgage qualifies for refinancing using a CDC/504 loan, the advantages to using a 504 loan, who business owners should  consult to see if they qualify, restrictions relating to refinancing an existing mortgage, deadlines for the temporary refinancing program and resources for business owners.

The article is posted on the Charlotte Chamber website – click here to read the entire article.

We welcome the opportunity to promote greater awareness of the SBA 504/CDC loan product so more commercial and industrial real estate brokers and small businesses understand how to maximize value as they expand.

ABOUT BEFCOR

BEFCOR is an Accredited Lender Program Certified Development Company (ALP-CDC) authorized by the SBA to market, underwrite, close and service SBA 504/CDC loans in North Carolina and South Carolina counties of York, Lancaster, Chester and Chesterfield. BEFCOR’s core business is providing long-term, fixed-rate financing to business owners, enabling them to own instead of lease their commercial real estate and other fixed assets. BEFCOR has supported local economic development by promoting business growth, expansion and job creation since designated as a CDC by the SBA in 1982.

Contact BEFCOR at 877-504-6045 or visit www.befcor.com for more information.

Loan activity at BEFCOR is increasing with the launch of a temporary refinancing program last month. Small businesses facing maturity of commercial mortgages or balloon payments before December 31, 2012 may be able to refinance their mortgage debt with a 504/CDC loan from the SBA under this new, temporary program.  Visit www.BEFCOR.com/bankers/ for more information about this program or call and talk with one of our loan officers.

Through the U.S. Small Business Administration (SBA) 504/CDC Loan program, BEFCOR partners with private lenders to provide long-term, fixed-rate financing to business owners, enabling them to own instead of lease their commercial real estate and other fixed assets. Our mission is to promote greater awareness of the 504/CDC loan product so more businesses have the opportunity to maximize value as they invest in their business expansion funding needs.

Through the Small Business Administration (SBA) 504/CDC Loan program, BEFCOR partners with private lenders to provide long-term, fixed-rate financing to business owners, enabling them to own instead of lease their commercial real estate and other fixed assets.  

Dale Carroll, North Carolina Department of Commerce Deputy Secretary will be the keynote speaker at this event. Seminars will include panelists from area banks, N.C. Rural Economic Development Center, Self-Help Community Development organization, N.C. Institute of Minority Economic Development, N.C. Bar Association, SBA, the Michael Scott Mater Foundation and other organizations.

“Business Capital 2011: Shaking the Money Tree” will take place from 1:00 p.m. until 4:30 p.m. on Thursday, March 10 at the Ketner School of Business at Catawba College. To reserve a seat, visit www.rccc.edu/sbc or e-mail amy.boger@rccc.edu.

Market research shows that a large percentage of commercial mortgages outstanding are set to mature within the next few years, particularly those held by community banks.  As real estate values have declined, however, even small businesses that are performing well and making their payments on time can have a hard time refinancing these loans and may need to restructure their debt.

Under the Small Business Jobs Act, the SBA will implement a temporary program—authorized until Sept. 27, 2012—allowing small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion, as is the case with typical 504 loans. This program will provide small businesses the opportunity to lock in long-term, stable financing, as well as protect jobs.

Key Program Features

• SBA will launch this temporary program on Feb. 17, 2011 and will begin accepting loan applications on Feb. 28, 2011.  The program will end on September 27, 2012.
• Borrowers can finance up to 90 percent of the current appraised property value, or 100 percent of the outstanding principal, whichever is lower, plus 504 eligible refinancing costs.
• SBA will initially open the program only to businesses with immediate need.  Priority will be on those businesses potentially at risk because they face loan maturity or balloon payments before Dec. 31, 2012.  SBA will later revisit the program parameters, and may open the program to businesses with later balloon payments or that can demonstrate need in other ways.
• The program is structured like SBA’s traditional 504 loan program: borrowers will work with third-party lending institutions and SBA-approved Certified Development Companies (CDCs), typically private, non-profit organizations to obtain financing, in a traditional 10%/50%/40% split.
• SBA estimates that as many as 20,000 businesses may ultimately participate in this program, which will provide up to $15 billion in SBA-guaranteed financing leading to total project financing of over $30 billion.
• The program, which is completely separate from SBA’s traditional 504 program, is zero-subsidy, requiring no cost to the taxpayer: It will be funded entirely through additional fees assessed for refinancing projects.

Key Risk Mitigating Factors

• Applicants must demonstrate that their loans are current and that they have successfully made all required payments in the last year.
• A new, independent appraisal will be required for all projects.
• SBA will perform full and thorough underwriting on all refinancing applications (i.e., there are no ‘delegated’ lenders).
• Initially, the first mortgage loans on existing 504 projects are not eligible, and “cash out” refinancings are not permitted.  SBA may later revisit these restrictions.   In addition, no government guaranteed loan is eligible for this refinancing program.

SBA’s 504 Loan Program

SBA’s 504 loan program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

Proceeds from 504 loans must be used for fixed asset projects, such as:

• The purchase of land, including existing buildings
• The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
• The construction of new facilities or modernizing, renovating or converting existing facilities
• The purchase of long-term machinery and equipment

Typically, a 504 project includes three elements:

a loan (or first mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a second mortgage secured with a junior lien from an SBA Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business borrower.

 
SBA Launches Temporary Program for Commercial Real Estate Refinancing

Agency will begin accepting refinancing applications Feb. 28 for small businesses facing maturing mortgages, balloon payments

WASHINGTON, D.C. – Small businesses facing maturity of commercial mortgages or balloon payments before Dec. 31, 2012, may be able to refinance their mortgage debt with a 504 loan from the U.S. Small Business Administration under a new, temporary program announced today. 

The new refinancing loan is structured like SBA’s traditional 504, with borrowers committing at least 10 percent equity and working with third-party lending institutions and SBA-approved Certified Development Companies in the standard 50 percent/40 percent split. A key feature of the new program is that it does not require an expansion of the business in order to qualify. 

SBA will begin accepting refinancing applications on Feb. 28. The program, authorized under the Small Business Jobs Act, will be in effect through Sept. 27, 2012.

“The economic downturn of recent years and the declining value of real estate have had a significant, negative impact on many small businesses with mortgages maturing within the next few years,” said SBA Administrator Karen Mills. “As a result, even small businesses that are performing well and making their payments on time could face foreclosure because of the difficulties they face in refinancing and restructuring their mortgage debt. This temporary program is another tool SBA can provide to help these small businesses remain viable and protect jobs.”

The SBA initially will open the program to businesses with immediate need due to impending balloon payments before Dec. 31, 2012.  SBA will revisit the program later and may open it to businesses with balloon payments due after that date or those that can demonstrate strong need in other ways. 

“We are making this initial restriction to make sure our funding goes first to small businesses with the most need,” said Steve Smits, SBA Associate Administrator of Capital Access.

Borrowers will be able to refinance up to 90 percent of the current appraised property value or 100 percent of the outstanding mortgage, whichever is lower, plus eligible refinancing costs.  Loan proceeds may not be used for other business expenses. Existing 504 projects and government-guaranteed loans are not eligible to be refinanced.

Congress authorized SBA to approve up to $15 billion in loans under this program ($7.5 billion in both fiscal 2011 and 2012).  Together with the first mortgage, this temporary program will provide up to $33.8 billion of total project financing.  Additional fees charged to the borrower will cover the cost of this refinancing program and as a result no subsidy will be needed.  The program is expected to benefit as many as 20,000 businesses.

SBA’s traditional 504 loan program is a long-term financing tool, designed to encourage economic development within a community. A 504 loan provides small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

Typically, a 504 project includes three elements: a loan (or first mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a second mortgage secured with a junior lien from an SBA Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business borrower.

BEFCOR continues to receive calls from lenders and prospective borrowers who are seeking information on the program.  BEFCOR understands that the SBA has submitted regulations for the program to the Office of Management and Budget (OMB) for review with the goal of getting the regulations to BEFCOR and other certified development companies (CDCs) by February or March 2011.  BEFCOR is currently trying to obtain additional information on the refinancing program for dissemination.