Linda Fong Acquires 6,000 SF Industrial Building for $1.85 M with Help from TMC Financing
When describing her 2017 experience with the SBA 504 Program, Linda Fong, owner of FASTSIGNS Oakland, stated she would do it again in a heartbeat. Fast forward three years later, she did it again.
Linda Fong purchased a building at 325 5th Street in Oakland for $1,850,000 to accommodate her rapidly growing franchise, FASTSIGNS. By utilizing TMC Financing and the SBA 504 Program again, Fong made the purchase with only a 10 percent down payment and a record low interest rate, fixed for 25 years.
“Linda was under the impression that she couldn’t take out a second SBA 504 loan since she was still paying off her last one, but that is not the case,” explains Kurt Chambliss who administered the 504 loan on behalf of TMC Financing. “Most business owners can have up to $5 million in aggregate debt with the SBA. Certain eligible energy-efficient or manufacturing projects have even greater borrowing capacity.
“Utilizing the 504 Program for multiple projects is actually a really smart way to go. The borrowing power of multiple 504 loans can amplify your business’s growth.”
SBA 504 loans enable a business owner to purchase, renovate, construct or refinance commercial real estate with only a 10 percent down payment. With the low down payment of the 504 loan, businesses can retain working capital so the company can continue to grow. Renovations, equipment, closing costs and soft costs can be financed as part of the total project cost.
“I was thrilled we could take advantage of the 504 Program again,” said Fong. “There is a misconception about the lengthy process and the documentation required, which is why some people avoid SBA loans, but I actually enjoy the process! To me, it’s easy and it makes me a smarter businessperson.
“You answer questions that plug up holes in your business plan and help you get your ducks in a row. The SBA wants to help your business grow so the ‘what, why, and how’ questions they ask are important for every business owner to have answers for. It makes you think more strategically. I feel prepared for what’s to come – I’m ready with plans a, b, and c.”
“We considered conventional financing but decided we wanted to preserve our cash. We’re still growing so fast. I want capital to be able to add the talent and equipment necessary to continue our expansion, not tie it up into a building.”
The acquired property is a 6,000 square foot standalone industrial building in an ideal location between Jack London Square and Chinatown. The building is a short walk to the Amtrak, BART, the free Broadway shuttle, and the Oakland Ferry. It has 16-foot ceilings (room for mezzanine down the road), and a roll up door.
“The property is perfect for our business,” said Fong. “It will allow us to eventually consolidate our production space with our showroom/sales office to conserve our resources. Being able to make the purchase with only 10 percent down opens so many more doors of opportunity.”
About SBA 504 real estate loans
The U.S. Small Business Administration 504 loan program allows small-business owners to finance commercial real estate and other fixed assets with long-term, below-market, fixed interest rates. SBA 504 loans can be used to finance the total project cost (TPC), which can include the purchase price, construction/renovations, equipment, soft costs and closing costs. A typical 504 loan project requires a down payment of only 10 percent of the TPC from the borrower, with the remaining amount split between a first mortgage provided by a commercial lender and a second mortgage provided by a certified development company (CDC). By enabling owners to keep their capital working to grow the business and create jobs, the 504 program provides long-term stability to both businesses and communities.
About TMC Financing
Founded in 1981, TMC Financing is the nation’s No. 1 provider of SBA 504 commercial real estate financing. The company has secured about $10 billion in SBA 504 financing, benefitting nearly 6,000 businesses throughout California and Nevada, and resulting in the creation of an estimated 60,000 jobs.