SBA 504 Blog

SBA Loan Requirements & Other Useful Commercial Loan Information

SBA 504 & 7a Loans, Green Commercial Loan Info & An Occasional Burst of Insight

Archives for August 2009

Clean Energy Tax Credit – More Power for Small & Mid-Sized Business

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The US Dept of Energy and the US Treasury have just announced a $2.3 billion tax credit program for green energy equipment manufacturers.

The program provides a 30% “investment tax credit” for companies producing renewable energy equipment and it should be a big help to manufacturers of the following types of equipment: 

  • Solar
  • Wind
  • Geothermal energy equipment
  • Batteries
  • Fuel cells
  • Micro-turbines
  • Electric car components
  • Materials used in electric grids that support the transmission of renewable energy
  • Energy conservation technologies
  • Equipment that captures (and sequesters) carbon dioxide or reduces greenhouse gas emissions.

This new program could help to enhance a loan program that has also been enhanced by the Stimulus Package – the Green 504 Loan. 

“The Green 504” is a new wrinkle with the SBA 504 loan program that allows companies that use or produce renewable energy to finance commercial real estate projects upwards of $12,000,000, so it is possible that this new tax incentive will encourage more businesses to consider an SBA real estate loan. 

The tax credit caps out at $2.3 billion and the credits are available for 2 years or until the money runs out. Full details of the program as well as instruction on how to apply are available from the Department of Energy website at:  www.energy.gov/recovery/48C.htm 

 For more information about the Green 504 loan please visit our main site at www.greencommercialcapital.com

 

Green 504 Loan: No Jobs Required

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SBA 504 Loans Do Not Always Require You To Create Jobs

Whoa…what?  Isn’t the 504 loan program a “Job Creation” program?

Well, actually…yes…but, like most things, there are exceptions.

Many business owners haven’t heard of the SBA 504 program, or if they have, they’ve only learned of it recently since it is one of the only viable commercial loan programs available for small and mid-sized businesses.

Whether you have heard of it or not, you may or may not know it provides the ideal way for a business in need of construction or expansion financing to go green and you do not need to satisfy any job creation requirements if you do.

(It may also be available for a non-expansion commercial mortgage refinance later this year).

By using the Green 504 loan to finance commercial property a business can sidestep the job creation public policy requirements of the 504 program and finance projects in excess of $12,000,000.

Is this cheating the system?  Well…no.

The 504 program was created at a time when we were still mostly a manufacturing economy and businesses were more people-intensive (think General Motors).  Nowadays there are many businesses that can operate with far fewer employees due to advances in technology and productivity, so it is only logical that the 504 loan now allows for this type of financing.

Ideally, the program will still create lots of jobs by enabling business owners to save money and hopefully reinvest those savings in their business – which in turn – will create more business and more jobs.  It will also help create jobs for the manufacturers of the renewable energy products that will be used by these “newly” green businesses.

Green Baby Steps

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The whole concept of “going green” has been around for decades, but it hasn’t exactly been in the forefront of our collective consciousness until the last few years.  It became a hot topic last year when gas prices were nothing short of ridiculous, but ever since prices dropped back down to a more “normal” level (and out of the headlines) the green movement has been pushed to the background. 

Those high oil prices definitely had a silver lining though, because they cost us all enough money for people to start to get serious about alternative and renewable energy and now there is a renewed focus on getting to people to go green and more and more businesses are realizing the benefits of doing so.

In fact, the SBA has come up with their own way of spreading the green, because now a healthy business can get access to the best commercial financing available if they are willing to become just a little more energy efficient.  I have talked about this in other posts: here and here  – but what I haven’t mentioned is how this seemingly small niche within a semi-obscure SBA commercial loan program could lead to very big things if more people got on board.

I think you will agree that most business owners would like to do what they can for the environment and I think that many of them know it would be good for business, but I suspect that they don’t know where to start.  Sure they probably recycle, but what else can they do?

Answer…they can take baby steps…”Green” Baby Steps.

What’s a Green Baby Step?

It is simply a small step towards going green and you can start when things need replacing.  For instance, something seemingly insignificant like like switching out your incandescent light bulbs with compact fluorescent bulbs that last 10 times longer, use 75% less energy and pay for themselves in about 6 months would be an easy place to start.  

From there, your next “green” step could come when your current systems get to the point where they need to be replaced or are no longer energy efficient and you can replace them with new, more efficient Energy Star products or better yet, you could use some solar or wind power. 

Every little bit helps, so just start taking those Green Baby Steps when the need arises and you will be on your way to helping the environment, saving money and probably increased sales from the good PR.

Out of SBA 504 Eligibility? Go Green and Get More

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There has been much discussion the past 6 months about the benefits of the American Recovery and Reinvestment Act (aka the “Economic Stimulus”), but one major benefit that has largely escaped media attention is that small and mid-sized businesses that were previously out of SBA eligibility now have a way to get more.

And it is quite simple really…they just need to go a little green.

Prior to the new legislation you had to be a small manufacturing facility to access the maximum SBA 504 loan, but now if you can make your business more energy efficient you can access more money from the SBA.

How can this help?  Well, let’s say you currently have an SBA 504 loan for a small assisted living facility or adult day care center and you want to open another at a cost of approx $6,000,000.  Let’s further assume that you have all of your SBA eligibility with your current 504 loan.  (Remember, the 504 loan is actually only the second mortgage – for more details about the structure of the 504 program please visit our main site: SBA 504 ).

$2 million would have been the most you could have (previously) borrowed under the program, but now if you go a little green and either cut your energy consumption on the new facility by 10% or more (or produce and use some of your own energy and it results in a 10% or more reduction in energy consumption) then “VOILA” you have made yourself and your property eligible for another $2 million in SBA 504 second mortgage financing…and you have reduced your long term costs.