How the SBA 504 Loan Program Can Help Your Business

BY: Dennis Haefer


Every craftsman knows there are multitudes of ways to construct a beautiful piece of furniture – and as many considerations to make in so doing. The same holds true for commercial financing: there are plenty of different means of achieving the same outcome; the challenge often lies in determining the best one for each individual client.

In financing, as in woodworking, it helps to begin with the end goal in mind. Commercial lenders will often first discuss with clients how the latter’s business operates at present, and then carefully assess risk tolerances and repayment capacity. Following those conversations, and after some further brainstorming and analysis, we, as lenders, can delve into our toolkit to construct a custom proposal that best meets the business’s needs, in both the near and long terms.

The Small Business Administration’s (SBA) 504 Loan Program has, in my experience, been a sturdy and reliable tool for as long as I can remember, and it’s one I’ve relied on for a dozen or more financing opportunities – including a fitness center, a large hotel, a national chain restaurant, a recycling center, an ad agency’s world headquarters, and a growing distribution business – throughout my career. In a nutshell, the Program is one of the few options for entrepreneurs to build a headquarters for their company with only a 10% down payment or capital injection. Other benefits include 25-year fixed-rate options, rates currently under 3%, and a longer committed term by the lender. Though a federal program, it is administered locally by the Wisconsin Business Development Corporation (WBD), which makes navigating the SBA paperwork maze much more manageable than it otherwise might be.

To date, the most challenging project I’ve worked on involved back-to-back SBA 504 loans, with a New Markets Tax Credit (NMTC) Program financing piece thrown in for good measure. Over a three-year period, I helped an entrepreneur build his company’s world headquarters, construct two additions, and manage double-digit sales growth. As a lender, working with small businesses on the upswing is an extremely rewarding experience, and in this particular instance, the SBA 504 financing option was integral to crafting a winning result. 

Most companies for which I’ve utilized the Program have a common denominator: Steady growth has sucked up much of their working capital, hampering their ability to put 20% down toward a new facility. If you are a business owner who’d like to discuss your operation’s growth and expansion challenges, and might be curious about whether the 504 Loan Program fits into your future plans, I would love to connect. Please feel free to reach out to me directly at dhaefer@sbcp.bank, or (608) 497-4604, and let’s start the conversation.
Author:

Dennis Haefer

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