For small and medium-sized businesses looking to expand, the U.S. Small Business Administration’s 504 loan program can help. Established in 1980, SBA 504 loans can be used to buy, build or improve owner-occupied commercial real estate or to fund other major fixed assets, such as equipment. In addition to the benefits of moving from tenant to owner, SBA 504 loans allow down payments as low as 10%, so business owners can maintain liquidity and preserve working capital for reinvestment and job creation. The below-market, fixed rates and long repayment terms can help improve cash flow. In short, the less a business spends on occupancy costs and debt, the more capital is available for business expansion.

SBA 504 loans typically have three participants: a bank provides a first trust deed loan for at least 50% of the total project cost, the small business owner contributes at least 10% and a Certified Development Corporation provides the SBA-guaranteed loan for the remainder, up to 40% of the total project cost. The CDC maximum is $5 million ($5.5 million for manufacturing and qualifying “green” projects), but there is no maximum on the total project cost.

TMC Financing, the leading CDC in Northern California for more than a decade, has been highly active in helping small businesses throughout Fremont. Recently TMC helped wholesale-furniture-maker Homelegance, Inc. improve operational efficiencies with the purchase of a 255,000-square-foot warehouse in Fremont. The owners were able to finance the replacement location with a $20.8 million total loan package. Homelegance only had to put in a 12% down payment for the purchase of the property. With the new facility, the manufacturer is able to expand operations and expects to create and retain more than 45 local jobs.

Hurricane Electric is in the midst of its third deal with TMC Financing, securing nearly $13 million for a 24,000-square-foot expansion of its existing Fremont 2 data center. In total, TMC, the SBA and Bank of the West have helped Hurricane Electric, which operates the world’s largest IPv6 native Internet backbone, access more than $66 million in commercial real estate financing.

TMC Financing and the SBA 504 program are designed to spur job creation and expand lending to women, minorities and veterans, as well as to boost U.S. manufacturing and rural/underserved area development. In the past five years, TMC has assisted 24 Fremont businesses with SBA financing totaling nearly $120 million, creating and retaining more than 200 jobs.

Funds can also be used to assist businesses in “going green” through LEED-certified buildings, reducing energy consumption or generating renewable energy. To learn more about the advantages of the SBA 504 loan program for your business, visit tmcfinancing.com.

Homelegance, Inc. purchased this 255,000-square-foot warehouse at 47550 Kato Road in Fremont using an SBA 504 loan from TMC Financing.