This Price Chopper received a boost from Midwest Small Business Finance and its loan programs.
Although the current economy has made small-business success rare, one program has helped to continue job-creating growth and entrepreneurial success.
The SBA 504 and other SBA loans have for years offered important options for qualifying startup and expansion projects. Recent changes and the relative scarcity of traditional loans make them more attractive than ever. In some cases, they make the difference between “just a dream” and business success.
Brothers Paul and Cy Bresette recently utilized a 504 Loan to purchase equipment in their new Price Chopper in Platte City. Although the two brought experience and good credit, the loan helped provide a key boost that freed other funds for operations and salaries. Paul Bresette noted that the most underrated benefit might be 504 Loan terms.
“Generally, when you go for a bank, the financing is for seven years,” he explained. “We were able to stretch this out for 10. Especially in these economic times, the better interest rate and stretching this over 10 years improves cash flow greatly. It’s a big advantage to know that I have additional funds that I can use to pay the jobs and grow the business.”
Although they can represent no more than 40 percent of qualifying projects, the attractive fixed rates and terms of the 504 combine with traditional loans for an extremely attractive net rate. And because the traditional lender such as a local bank retains first-lender position, 504 loans reduce bank risk and make for more attractive projects that are more likely to get traditional funding, even in the current economy.
The brothers received their 504 Loan from Midwest Small Business Finance, the largest 504 lender in the area and a SBA Certified Development Company. Finance Director Karine Decker said the Bresette’s experience is not that unusual, although some recent changes made their experience especially attractive.
“This was the first loan in our portfolio to be approved under the new stimulus package provisions,” Decker explained. “That qualified them for fee reductions that saved them an additional $26,400.” With small businesses accounting for more than half of all employment and a majority of current growth, expansion in this area is critical.
Bresette said that savings was significant, but noted another advantage in his project. “I had very little expertise in that process,” he admitted. “They really took care of the details. It’s a surprisingly streamlined process.”