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Montana Small Business Benefits from Small Business Jobs Act
Temporary Refinance Provision available under 504 Loan Program
As part of the Small Business Jobs Act of 2010, the SBA provided temporary authority allowing refinance of existing eligible debt under the SBA 504 loan program. The program, administered through Certified Development Companies (CDC), typically finances acquisition of owner occupied commercial property and large equipment needs. In an effort to stimulate the economy, the loan program can now temporarily refinance certain eligible debt on property, without additional funds being borrowed to expand a facility.
Montana Community Finance Corporation, in partnership with Zions First National Bank of Idaho Falls, Idaho, obtained SBA approval under this temporary authority, and funded the first such loan made in the State of Montana since this change was made to the program.
Derek Ence, owner of Ence Properties LLC dba Hotel Developers Missoula Staybridge, said “I think the SBA helping us small business owners refinance our property in this difficult lending environment is a very helpful thing to help the economy recover and provide jobs for our good local people.”
Zions Bank utilized the new SBA 504 Refinance Program to benefit the customer, local community/economy and to strengthen Zion Bank’s position, including:
- giving Zions Bank some flexibility if the borrower/hotel requests future funding needs to capital/FF&E improvements;
- offering the SBA portion at a low fixed rate for 20 years, benefitting the borrower’s cash flow; and
- increasing the term of the loan to 10 years instead of the standard 5 years, with SBA backing, utilizing a 25 year amortization.
Linda Kindrick, Executive Director of Montana Community Finance Corporation, the CDC that facilitated the loan approval, said “Derek is a great customer and business owner. He was easy to work with in preparing the application for the loan. Allan Woolley at Zions Bank was also very accommodating in supplying all the information needed to meet the requirements for refinance of their existing debt. We are proud to have been able to help both the business and the bank take the next step.”
The refinance of certain eligible debt is a temporary program that ends September 27, 2012. Banks and small businesses need to act fast to take advantage of this great refinancing option.
The basics of the SBA 504 refinance loan are simple:
To be eligible, the small business must be a for-profit company that has a tangible net worth of less than $15 million and after tax profit of less than $5 million.
• The debt to be refinanced must have been entered into at least 24 months prior to the SBA refinance application
• The qualified debt must be for a commercial loan which is current and has been paying as agreed under the original or modified bank terms for the past twelve months
• The eligible small business must currently occupy 51% of the property to be refinanced
• The refinanced amount can be up to 90% of the appraised value of the subject property
• Existing 504 projects and government-guaranteed loans are not eligible to be refinanced
Montana Community Finance Corporation (MCFC) is a Certified Development Company licensed and regulated by the U.S. Small Business Administration (SBA) to deliver 504 loan financing. MCFC’s role is to package, process, close and service SBA 504 loans in the state of Montana and has been doing so since 1984. The professional staff, located in Helena, MT works with the lender and/or the small business owner to tailor a financing package that meets program guidelines and the credit criteria of the business. Contact MCFC to see how they can help you – whether it be refinance of existing debt or new financing.
A Bowl of Ice Cream, a Dream, and the SBA
The love of ice cream and the desire to get into business is what drove Brian and Kelly Ackerman to purchase The Parrot Confectionery, a Helena Landmark.
The Parrot is currently celebrating it’s 87th year in Helena and is saying goodbye to longtime owners the Duensing’s. The Parrot has been part of the Duensing family for over half a century and they are now ready to turn over the business to new owners the Ackerman’s.
Brian and Kelly were looking for a way to return to their home state of Montana, when discussing over a bowl of ice cream in their home in Maryland, brought them to the idea of going into the candy and ice cream business. And that was the beginning of the journey that brought the Ackerman’s home to Montana and into the world of candy making.
The Ackerman’s were able to purchase The Parrot only by way of the U.S. Small Business Administration (SBA). When Brian first contacted lenders looking for financing it was difficult if not impossible to get the financing they needed to purchase the business since a lot of it was for blue sky. (Blue sky meaning customer base.) But with Brian’s knowledge of SBA and their loan programs, he was able to contact the right people at Wells Fargo and get the money needed to take over this well known confectionery.
“There was no way I was going to be able to get the financing without the SBA guaranty,” Brian said.
“I was sitting on pins and needles waiting to hear if we got approved, and was so excited when it went through,” said Brian. “The (loan) process was a great lesson in patience, it got me prepared for the business I was about to take over.” They started in October of 2008 and signed the final papers July 1, 2009, but it was worth the wait.
When asked about the most difficult part of learning the business reins, Brian said “it’s hard to get a grasp on how much product we go through and keeping our ingredients stocked and the lead time needed to get the inventory delivered.”
The Parrot goes through 100 pounds of sugar a day and that makes about 3 batches of candy. The basement is getting stocked for the holiday season which means there’s about 6,000 pounds of chocolate in the basement waiting to be made into truffles, parrots and other assorted candies.
Brian said it’s hard because the Duensing’s do everything second nature and they’re starting from scratch (no pun intended) and need to know the how, when and why for everything. They’re taking it all in while the Duensing’s stick around for a year to help show the Ackerman’s The Parrot way of doing things.
The Parrot is known not only for it’s ice cream, candy and lunch menu, but also for it’s atmosphere. And as promised the Ackerman’s don’t intend to change a thing. A few additions may come in the future, but nothing dramatically different. One of those additions includes shipping year round and possibly the presence of The Parrot on the internet.
But for now it’s business as usual as The Ackerman’s stir their way into their dream of business ownership.
Veteran Turned Business Owner With the Help of SBA’s Patriot Express Loan
Veteran turned business owner…that seems to be a common theme these days. For the men and women of the U.S. military, returning to civilian life is often bittersweet. Veterans who have left the U.S. military in the past 10 years are facing an unemployment rate of 12.1 percent, according to the latest data from the Bureau of Labor Statistics.
The lessons learned from military service: leadership, teamwork, problem solving, and hands on practical experience are the same attributes needed to succeed in business. These skills combined with the challenging employment conditions and SBA loan advantages, it only makes sense that nearly a quarter of newly discharged veterans consider starting their own businesses.
Over three years ago, the U.S. Small Business Administration launched a pilot loan program, called Patriot Express, dedicated to assisting veterans and spouses of veterans turn their small business dreams a reality.
Patriot Express loans can be used to start or expand a small business and is offered by SBA’s network of participating lenders, featuring SBA’s lowest interest rates for business loans.
In honor of Veteran’s Day, Joe McClure, Montana District Director for the U.S. Small Business Administration, visited a local veteran-owned small business and Patriot Express recipient, RoughStock Distillery in Four Corners near Bozeman.
Owners Bryan and Kari Schultz led a tour through the RoughStock Distillery facility - the first legal Montana whiskey distillery since Prohibition – and educated McClure about the production process which involves mixing, mashing, fermenting and aging.
Schultz pointed out that one of the biggest difficulties in getting started was the lack of knowledge of making whiskey (as it’s illegal to home produce), so it was definitely a process of “learn as you go.”
One thing they knew from the start (both Bryan and Kari are fourth-generation Montanan’s); they wanted to use Montana’s agriculture in their whiskey. “We have world class grains right here in Montana,” Schultz said with enthusiasm. “Why wouldn’t we put it to good use in our whiskey products?”
RoughStock made a name for themselves in the whiskey market because of the uniqueness of using local Montana barley rather than the usual corn or rye. As the popularity of Single Malt Montana Whiskey grew, RoughStock introduced four other whiskey varieties including Black Label, Spring Wheat Whiskey, Straight Rye Whiskey and Sweet Corn Whiskey.
RoughStock has exceeded everyone’s expectations, including owners Bryan and Kari. Their five year goal was to reach regional markets outside Montana such as Idaho and Colorado, however in three short years RoughStock’s market reaches across the U.S and international markets including Canada and Europe.
In the beginning the Schultzes used their own start-up cash along with a small SBA Patriot Express loan from Big Sky Western Bank. Then, after developing a fine-tuned product, which took the whiskey market by storm, the Schultzes returned to Big Sky Western Bank to help with expansion. RoughStock then acquired another Patriot Express loan to purchase a double still that will shorten the usual one week process of distilling down to one day.
“I’m excited SBA can be a part of this great opportunity for the Schultzes and RoughStock to make history,” said McClure, SBA District Director. “RoughStock is a unique business that puts Montana on the map in the whiskey industry and uses Montana’s greatest resources to feature a great product.”
If you are a veteran or qualifying military member interested in starting or expanding your own business, contact the SBA today at 406.441.1081. Let SBA help turn your dreams into a reality! Learn more by logging onto www.sba.gov.
Who May Apply for These Business Loans:
o Veterans
o Service-disabled veterans
o Active duty service members
o Reservists and National Guard Members
o Current spouse of a veteran or service member
o The widowed spouse of a service member who died during service or as a result of a service disability
What kinds of businesses? Applies to both start-ups and established businesses.
What can the loan be used for? For most business purposes, including start-up, expansion, equipment, cash flow, payroll, overhead, working capital, or inventory.
