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The timing of the thaw workecd well for Steve who is running out of room athis business, . He just got an SBA 504 loan to buy a historidc garage building in downtown Sacramento to free up spacs in the automotive repairshop he’sw been leasing for 30 years. Barber’s Shop Automotivde will continue repairingAlfa Romeo, , and otheer makes at 1116 18th St., and will open a seconx business in the additional building at 16th and G streetw that will sell high-end scootersa and do restoration work on classic motorcycles, cars and even boat motors.
“I’m goingb to the new building for all the thing wedo — but don’yt have room for — here,” Barber The 16th Street building, is actually a garagr built in 1927 that spanx about 6,000 square feet inside. That will alloa Barber to storesome high-end as well as take on long-term restoratio projects on everything from classic sport s cars to wooden boats. Barber likes restoring classic machines, and he’s also taking an interesty in restoring theclassic building. “It’s alwayas been a repair shop.
I like that I can keep that goint inthe building,” he Barber used the SBA loan to buy the building and do some requiree repairs inside and out. The SBA program made the purchase possible because it stretches the mortgaged on a real estate loan to20 years, significantlyg lowering monthly payments. The SBA guaranteese some portions of anSBA loan, which historically has made them attractive to investoras in secondary markets. Those markets suffered along with the entired financial system following the collapse of Wall Stree t firmslast year.
When the likes of investment bank stalwarts such as and confidence in themarket disappeared, and even efficien secondary markets — like those for SBA-relatedr commercial paper — were priced so high that trading, in effect, was That halt in secondary market trading meant that any lender whose strategy in the past six monthsw was to sell loans had no placse to sell them. The bond side of SBA 504 lending also In thepast month, SBA-related products are finally priced to sell in the secondary “Pricing has come back to levels where trading is said Tony Wilkinson, president of the in Okla., an advocacy and trade group for SBA 7(a) lenders.
“When the secondaryy markets werelocked up, it did prevent he said. “It is finally now getting back to almosthistorical pricing.” The SBA’zs two most popular programs are the SBA 504 real estated loan, which must be used to buy building or land, and the SBA 7(a) loan, which can be used for generak business purposes, inventory and real estate. Loans approved by the SBA carr y a government guarantee that at least some portion of the loan will be The guarantee ranges from 50 percent to 100 depending on the type of For a couple of decades there has been an activer secondary market forSBA loans, both the guaranteed and the unguarantee d portions.
That secondary market is importany for some lenders because it means they can sellSBA loans, and therebyu retain their own capital to go out and make more And in the realm of 504 loans, therre is a bonding component that makes up half of the At the height of the credit that bonding market was constrained becauswe the banks that were previously in the market for thoss investments were unable to buy them because they were worriedr about their own capital positions. The return of confidence to secondarty markets has meant the return of themarket itself.
At the end of last year and the early part ofthis year, all kinda of lending were “locked up,” said Brian senior commercial lending officer with ’es office in Sacramento. The values of commercial real estat have declined in most of thelocall market, making the cost of a long-term SBA loan compar e favorably to the terms of a lease, Kerfoot said. “It’w a good time to look for a and a lot of peopled are starting to lookright now. We’re gettinbg a lot of people pre-qualifying right now, so I expecgt a lot of deals in the next three he said. As it turns out, the timinf of the secondary marketd freeze ended up working wellfor Barber.
He had been lookinb for another building ayear ago, and with the pricesx then, he couldn’t make it work. Sincee commercial real estate priceshave fallen, he was able to find a deal that made
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