Montana Community Finance – SBA 504 Loan Program Continues Small Business Lending In Spite of Current Credit Crisis

National Association of Development Companies reports SBA 504 loans are available for business expansion for America’s small business entrepreneurs

In spite of the credit crisis that has gripped many financial institutions and slowed lending for commercial expansion, the National Association of Development Companies (NADCO), of McLean, Va, is assuring small business entrepreneurs that SBA 504 loans are still available for qualified small businesses during these turbulent economic times. “The credit crisis has not frozen the SBA 504 loan program and loans are still available for businesses seeking to expand through real estate acquisition, or simply adding on to their existing facilities, or needing to make large equipment purchases” according to NADCO President Christopher Crawford. “Certified Development Companies (CDCs), our banking partners and the SBA are doing business as usual and will continue to do so for the long haul. 504 loans provide a steady source of new long term capital at a fixed rate, and frequently with only 10% down on a new project for a small business, helping to conserve cash for operating expenses.” A vacant commercial property in a neighborhood can represent an opportunity for a small business owner who needs more space. Now may be the perfect time to consider expanding into that larger facility, or simply seizing the chance to buy that first facility for a thriving small business at a very advantageous price.

In fact, the intent of SBA loans is to provide access to capital for small businesses that might not otherwise be available through regular capital market channels. When the economy is strong and access to capital is relatively easy, there is typically less demand for SBA financing. In the case of the SBA 504 loan, a private sector lender partners with a CDC to provide financing for the purchase, construction or renovation of owner-occupied commercial real estate. Use of the SBA 504 loan tends to become increasingly important as a source of long term financing when traditional sources of money decline as they have in recent months.

There are some commercial banks or other lenders that are unable or unwilling to provide financing to small businesses at this time. However, the CDC industry reports that virtually all lending partners using the 504 program are still actively lending on SBA projects to qualified expanding small business borrowers who are creating new jobs or retaining jobs in their communities. The SBA 504 loan program remains a great program for banks, since it mitigates private sector lender risk on commercial real estate financing through the use of an SBA guarantee.

Funds for the SBA 504 loan program come from the sale of long term bonds each month. These bonds carry the full faith and backing of the U.S. government and present an attractive investment option for money managers, pension funds, insurance companies and other large institutional investors. The sales of SBA 504 bonds, known as debentures, have been successfully conducted every month for the past 27 years. Crawford concluded, “The amazing part about 504 is that it costs the Federal government absolutely nothing, due to the low default rate costs that are covered by its low fees. There is no requirement for a Congressional appropriation of funds for 504.”

Montana Community Finance Corporation http://www.mtcommunityfinance.org (MCFC) of Helena is a Certified Development Company that stands ready to assist in keeping Montana’s economy going through the 504 loan program. MCFC has been serving Montana’s small businesses and lenders since 1984. MCFC was recently recognized by the Montana District Office of the SBA for being the top CDC in the state, with 21 loans approved for SBA’s most recent fiscal year end, attesting to the continued viability of the program.

To find out more about Montana Community Finance Corporation, check out their website at http://www.mtcommunityfinance.org or call them at 1-866-443-3261, toll free.

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Helena – Montana Community Finance Corporation announces 504 loan activity

Linda Kindrick, Executive Director for Montana Community Finance Corporation (MCFC) of Helena announces MCFC obtained approval from the U.S. Small Business Administration (SBA) on 21 504 loans for $9,926,000 for fiscal year 2008 (October 1, 2007 to September 30, 2008). This represents 55% of the total 504 loan activity for the state of Montana. MCFC provides up to 40% of the financing needs for the business owner, with the other 50% coming from third party lenders and no less than 10% from the business owner. The third party lenders provided financing for $12.8 million for these projects, with a total project cost of $21.2 million.

Based on the information provided by the customers, these loans will create 267 new jobs, in addition to the 295 jobs they previously had, for a total employment impact on the state of 526 jobs. Counties served include Lewis & Clark, Ravalli, Cascade, Yellowstone, Gallatin, Hill, Missoula, Flathead and Park. A variety of businesses were served including veterinarians, restaurants, hotels, contractors, medical professionals, grocery stores and manufacturers.

Businesses owned by veterans, women, minorities, new businesses, those located in rural communities and one involved in exporting were beneficiaries of the loan program.

Linda recognized the importance of the entire MCFC team in the success of the program, including members, board members and staff.

Montana Community Finance Corporation is a Certified Development Corporation that originates and services loans for the SBA 504 Loan Program, located in Helena, Montana. MCFC has been serving Montana’s small businesses and lenders since 1984.

To find out more about Montana Community Finance Corporation, check out their website at http://www.mtcommunityfinance.org or call them at 1-866-443-3261, toll free.

Contact: Linda Kindrick
Montana Community Finance Corporation
7 West 6th Avenue, 4th Floor
P O Box 916
Helena, MT 59624

e-mail [email protected]
Phone 406-443-3261
Toll free 866-443-3261
Fax 406-449-5678

About the National Association of Development Companies
Created in 1981, the National Association of Development Companies is the trade association for America’s Certified Development Companies (CDCs). Certified by the U. S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA’s 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state, and local economic development loan programs.