Morgan Hill Times | SBA helps Morgan Hill landscaping company gain financial foothold
Morgan Hill’s NewPath Landscape Services recently used long-term loans from the US Small Business Administration that helped the company grow its assets and reduce unpredictable recurring costs.
NewPath co-owners Filiberto Fonseca and Gino Borello have purchased approximately US $ 1.6 million in loans under the SBA 504 program that “finance large tangible assets that help business grow and create jobs” it says on the SBA website.
In NewPath’s case, Fonseca and Borello used the SBA 504 loan to fund two projects: the purchase of eight acres of vacant land and the purchase of a 4,608-square-foot building in Morgan Hill, according to a press release from TMC Financing got the loan for NewPath processed.
The purchase of the property required a down payment of 10 percent. By making these home purchases with multiple SBA loans, NewPath avoided the use of paged storage. The loans also helped the company “escape unpredictable lease payments,” the press release said.
SBA 504 loans are one of many tools available to small businesses at a time when the industry is facing formidable financial challenges. Oakland-based TMC Financing – a community development company certified to process SBA 504 loans – reports that since the beginning of the Covid-19 pandemic and related restrictions, small businesses across the country have been taking out 504 loans have taken to position themselves fully reopening in the near future and recovery.
“The SBA 504 program provides a unique avenue for small businesses looking to mitigate the effects of uncertainty, proactively support the bottom line, and find their way back,” said Barbara Morrison, president of TMC Financing. “The SBA 504 loan program – known for providing the company with attractive financing to purchase commercial real estate – also provides the ability to refinance existing real estate debt at historically low interest rates and receive cash trapped in the property.”
According to the SBA website, the SBA 504 program offers long-term, fixed-rate financing of up to $ 5 million. Loans can be used to buy existing buildings or land, build new facilities, and finance machinery and equipment. SBA 504 loans can also be used to improve or upgrade existing properties.
From March 1 to November 30, 2020, the SBA 504 program approved 1,011 loans in California, equivalent to more than $ 1.1 billion in small business funding, according to TMC Financing.
In 2019, SBA 504 activities accounted for 1,279 loans valued at approximately $ 1.28 billion. These loans helped an estimated 11,900 jobs in California, according to TMC Financing.
Small businesses can use SBA 504 loans to refinance up to 85 percent of a property’s appraised value and receive up to 20 percent of the property’s value in cash, Morrison added. “This money can be used for skilled business expenses, including salaries, rent, utilities, and inventory,” she said.
Entrepreneurs who don’t need extra cash can continue to leverage the SBA 504 program to take advantage of historically low interest rates, the press release adds.
“The SBA 504 rate is fixed and will be fully amortized over 25 years. For a direct no-pay refinance project, loan 504 can refinance up to 90 percent of the property’s estimated value. In addition, the refinancing project can consolidate multiple loans as long as they were originally used to purchase the property, ”the press release from TMC Financing said. “After refinancing with an SBA 504 loan, business owners can enjoy a fixed occupancy – no more rising leasing costs. The repayment period of up to 25 years without balloon payments and fixed monthly payments offers the certainty of having stable and predictable operating costs. “
For more information on the SBA 504 program and other small business financial resources, please visit sba.gov.