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Self-Help Ventures Fund
SBA 504 Loan Program e-news Brief
September 2007
 
504 rates are falling! Our Underwriting Tip this month covers just how that's going to benefit you and provide some welcome relief to your borrowers. We also spotlight a thriving Triangle-area recycling operation started by a woman who never planned to be a business owner.
 
We appreciate your ongoing support and look forward to working with you to provide 504 financing in all seven Self-Help locations statewide for growing small business communities.

For an in-depth look at the SBA 504 program, please visit the 504 section of Self-Help's website at www.self-help.org/504loans.

 
Jim Overton
Director of SBA 504 Lending
UNDERWRITING TIP: 504 Rates are Falling Down, Falling Down

With the start of the new federal fiscal year on Oct. 1, there is some welcome relief on debenture fees for all new 504 borrowers.

Right now, every 504 debenture contains an "SBA Guarantee Fee" that is paid to the SBA as part of its loan loss reserves. That fee equates to 50 basis points on the debenture amount. In other words, if we're financing $400,000 of a $1,000,000 building, then the borrower's debenture would include a $2,000 charge for the SBA Guarantee Fee.

Because the national 504 portfolio has been performing so well, the SBA has determined that it does not need to charge this fee on future 504 debentures.

This reduction drops the built-in debenture fees from 2.65% to 2.15%. Since we only do a maximum of 40% of the project financing, this lowers our debenture fees on average to less than 1% of the total financing.

We estimate that this fee reduction will save borrowers an average of 7-10 basis points over the lifetime of their loans - dropping our already low rates even lower.

Two caveats we want to point out:
  1. The fee reduction applies to new loans only. So we cannot go back and remove this fee from loans already approved by the SBA.
  2. This fee is not the 50-basis-point lender fee that is calculated on the lender's permanent mortgage. That fees will remain in effect.
If you want to see a sample copy of how this fee will change the typical debenture, e-mail us at 504loans@self-help.org and we'll send you a sample spreadsheet showing the way this will affect the debenture structure.

BORROWER SUCCESS STORY: SHIMAR RECYCLING

In 1997 recycling educator Meredith Marley was only in her mid-20s and had no thoughts of becoming a business owner. She now heads up Shimar Recycling, a thriving non-hazardous waste    recycling coordinator.

In 2000, the company worked with SunTrust and Self-Help to take out an SBA 504 loan that allowed it to move into a larger, more adequate recycling facility. Shimar ultimately helps its clients, mainly small businesses, contribute to the development of sustainable communities.

 For the past 10 years, Shimar Recycling...
In This Issue:
504 Rates are Falling Down
Borrower Success Story
Current 504 Loan Rates
Lenders Spotlight
Contact Us

CURRENT 504 LOAN RATES

6.53%
fixed for 20 years for real estate projects, including acquisition, new construction and major renovation

6.50%
fixed for 10 years for heavy-duty equipment and machinery

(as of Sept 12th, 2007)
LENDERS SPOTLIGHT: SELF-HELP AUGUST 2007 SBA 504 APPROVALS

Thanks for your partnership with eight strong deals in August!

LENDER                    LOCATION               INDUSTRY                           PROJECT COST
Bank of America        Winston Salem    Latino Food Product Distributor              $3,130,000
Bank of Commerce    Charlotte              Auto Repair                                            $585,000
Bank of Granite          Gastonia             Pediatric Care Center                            $1,056,000
BB&T                        Chapel Hill           Child Care Center                                 $1,140,000        First Citizens             Holly Springs        IT Consulting                                          $160,000        First Citizens             Charlotte              Commercial Printing                                $325,000        Lumbee Guaranty       Lumberton           Motel                                                   $4,975,000
Southern Community  Clemmons           Auto Repair                                             $412,000                                                                                             TOTAL              $11,963,000

CONTACT US

Call the Self-Help loan officer nearest you to discuss a project or learn more about how you can use an SBA 504 loan to help your small business customers. 

Charlotte NC Region: Dale Harrold and Ralph Ansell, Self-Help, Great Aunt Stella Center, 926 Elizabeth Ave., Suite 302, Charlotte, NC 28204 * 800-394-7428

Sandhills NC Region: Allen Cofiori, Self-Help, 100 Hay St., Suite 300, Fayetteville, NC 28301 * 800-774-7966

Northeastern NC Region: Adelcio Lugo, Self-Help, 301 South Evans St., Suite 306, Greenville, NC 27858 * 800-893-9669

Southeastern NC Region: Louis Rogers, Self-Help, 272 N. Front St., Suite 300, Wilmington, NC 28401 * 877-559-4284

Triad NC Region: Anna Tefft, Self-Help, 122 N. Elm St., Suite 1015, Greensboro, NC 27401 and 500 West Fourth Street, Suite 200, Winston-Salem, NC 27101  * 800-269-7426

Central NC Region: Joe Osowski, Self-Help, 301 W. Main St., P.O. Box 3619, Durham, NC 27702 * 800-476-7428

Western NC Region: Tom Byers, Self-Help, 34 Wall St., Suite 704, Asheville, NC 28801 * 800-229-7428

Contact our SBA 504 Program Director, Jim Overton, at 919-956-4473.

Or contact our SBA 504 Marketing Officer, Jamie Miyares, at 919-956-4670. 

This email was sent to jung.ryu@self-help.org, by 504loans@self-help.org
Self-Help Ventures Fund | 301 West Main St. | P.O. Box 3619 | Durham | NC | 27701