When Taylor Lombardo Architects was scrambling to purchase an office building in San Francisco, it found affordable financing through the U.S. Small Business Administration's CDC/504 loan program. Aimed at healthy, growing companies that are unable to pay cash, the loan allows borrowers to put 10 percent down (compared to the 20 percent or 30 percent required by banks) and charges a flat interest rate —currently about 6.2 percent. The SBA lends up to 40 percent of the project cost and arranges conventional financing for the remaining 50 percent.
“If the purchase is a big stretch because a firm is hoping to grow into a building much bigger than it needs at the moment, we'll stretch out the amortization to 40 years instead of 20,” says Jacklyn Jordan, president and CEO of San Francisco-based Capital Access Group, the SBA lender with whom Taylor Lombardo worked. In qualifying businesses, “We look at the personal financial statement,” she continues. “Maybe there's nothing left on the bottom line, but maybe the owner is making more than he or she actually needs to live on and can add it back to cash flow.” What's more, she adds, the loan “is assumable if someone else acquires the property, and that's a nice thing to be able to advertise if you need to sell.”