SBA 504 plays starring role as commercial lending freeze unfolds nationwide

ALTAMONTE SPRINGS, Fla. — October 22, 2008 – It’s a story older than Mickey Rooney’s Andy Hardy movies, older than Hollywood or Broadway, and probably older than Aristophanes,  the Greek dramatist who first told a version around 400 B.C.  When the leading star falls ill just before opening night, a little known understudy steps in and belts out the show’s title song with such vigor that a new “star” is born.

That’s exactly what’s happening across the U.S. as banks clamp down on their commercial lending practices and business leaders find themselves victims of a nationwide commercial lending freeze. The little known understudy — the U.S. Small Business Administration (SBA) 504 lending program — is rising to the occasion.

“We’ve heard the story from business leader after business leader lately,” said Christopher Hurn, president and chief executive officer of Mercantile Commercial Capital LLC, the Altamonte Springs based firm that specializes in SBA 504 loans for small business owners who want to acquire or develop their own facilities and create new jobs.

“Banks are saying “no more loans,” ignoring or rescinding official commitment letters that backed business owners’ bids on facilities or to build new buildings,” Hurn said.

“For some business owners, it’s tragic. For most, it means coming up with a lot more equity if they’ll lend at all,” Hurn said.

Fortunately, some SBA 504 lenders are still busy, still funding 90 percent loan-to-value commercial mortgages and permanent loans. Mercantile Commercial Capital is one of them. The nearly six year old company is the leading SBA 504 lender in Florida and the southeast region, but Hurn wants to be the leading SBA 504 lender nationwide.

“We just closed five commercial loans last week and four of them are 90 percent loan-to-cost loans,” Hurn said.  The low 10 percent equity requirement — on loans that typically average $1 million and range up to $10 million — means the difference between success and failure for small business expansion, Hurn said.

“In fact, our SBA 504 loans are creating once-in-a-lifetime opportunities for some business owners,” Hurn added.

“For those who can get financing, prices on existing real estate properties are an exceptionally good value in this phase of the market cycle because many highly motivated sellers and many commercial construction companies too, have reduced their prices to historical lows,” Hurn said.  “Plus, interest rates are near historical lows, as well.”

“This is a great time to buy commercial property, probably a once-in-a-lifetime anomaly that’s bound to fade as the economy recovers and pricing grows more robust,” he said.

“SBA 504 loans typically offer below market interest at fixed rates with 20 year terms,” Hurn said.

For more information please contactChris Hurn, Mercantile Commercial Capital, LLC 407-786-5040Robin Lashley, Mercantile Commercial Capital, LLC 407-786-5040Larry Vershel or Beth Payan, LV Communications, 407-644-4142



Posted Under: Mercantile Commercial Capital