by Joe Wilhelm Jr.
Staff Writer
Millions of dollars in loans have been available to help small businesses grow through a government program for years, but even more money is now available if businesses include green practices in their development.
The U.S. Small Business Administration (SBA) 504 Loan Program is available to for-profit small businesses planning to buy land for construction of a new building, pay for construction of a new building, acquire land with an existing building, renovate an existing building or purchase furniture, fixtures and equipment. Typical projects eligible for SBA funding cost about $1.5 million with the loan structured so that a private lender finances 50 percent of the loan, the SBA finances 40 percent through a Certified Development Company (CDC) and the borrower contributes 10 percent of the total project cost initially.
“What’s great about this program is we can offer a below market, fixed-rate, long-term loan,” said Kristen Tackett, vice president of the area CDC Florida First Capital Finance Corporation (FFCFC). “Which is something small businesses might not be able to find with other lenders.”
The top five small businesses utilizing the program in Florida are hospitality, restaurants, physicians, dentists and car washes, according to Tackett.
“Working with First Coast Community Bank, my loan officer recommended the SBA 504 Loan program and Kristen’s (Tackett) group (FFCFC),” said J. Bard McLean Jr., whose Plaza III Steakhouse opened in December 2005. “It was one of the three loans that I received and they were as easy to work with as anybody else, their requirements pretty much mirrored the banks. They have been very courteous and helpful, and everyone seems to be working with small businesses during these tough economic times.”
In an effort to provide options during a downturn in the economy, FFCFC partnered with the Jacksonville Chapter of the American Institute of Architects to co-sponsor the lunch-and-learn seminar at Compass Bank on Skinner Lake Drive in Jacksonville Tuesday. Most of the people in attendance wanted to get better acquainted with the program.
“We want to help our clients however we can,” said Dean Scott, architect. “We have very few clients that are self-funding projects these days, so they have different sources of funding and sometimes they can lose one of those sources. Helping with that problem is just part of the business. That‘s why I‘m here today, to learn more about the program to better help my clients.”
This sentiment was shared by another of the seminar attendees.
“Architects want to be that one source,” said Lane Manis, executive director of the American Institute of Architects Jacksonville Chapter. “To guide people through the process and funding is a part of that process.”
In order to be a part of that process, businesses have to qualify for the program. Applicants must operate for-profit, owner occupied and credit worthy small businesses located in Florida with a tangible net worth of less than $8.5 million and net profits after tax of no more than $3 million.
Once a business is qualified, it may also find it is eligible for a larger loan if the project meets a public policy objective of the program. These objectives include: revitalization of a business community, expansion of exports, expansion of women/minority/ veteran majority-owned business, rural development, enhanced economic competition and changes necessitated by federal budget cutbacks. If one, or more, of these is met, the borrower may be able to borrow up to $2 million for the project.
More funding was made available through the SBA 504 loan program because of the “Energy Independence and Security Act of 2007,” which added three new public policy objectives to the program.
Up to $4 million in financing is available for a small business with plans to incorporate energy saving technologies into new construction or retrofit existing facilities to cause a 10 percent decrease in energy consumption. The same financing is also available for a real estate purchase or construction project that contributes to the production of renewable energy such as, solar, biomass, hydropower, ocean thermal, geothermal or wind. Generating energy doesn’t have to be the primary business of the company, just enough to cover its own energy needs.
The third objective rewards small businesses that incorpor-
ate sustainable design into their projects according to Leadership in Energy and Environmental De-sign (LEED) standards and the Green Building Certificate Institute. Following those guidelines will qualify a small business for up to $2 million in SBA 504 financing.
Toward the end of the seminar talk switched from what was available through the SBA 504 program to what might be available through the new federal stimulus package.
“There are some things being considered right now that even blow my mind,” said Tackett. “Number one, they are considering completely eliminating the SBA Loan fees for one year. There were three fees prior to this set by the government, non-negotiable, one and half percent was a processing free that goes to the CDC, funding fee and underwriting fee. There is talk of these fees going away for a year, which would allow a borrower to get a loan for no fees. With the rates that are out there now, that would be awesome.”
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