Alternative Financing Helped Busy Optometry Practice Expand

Best Vision, Des Plaines, Illinois

When Dr. Shelley Kim, owner of Best Vision in Des Plaines, Illinois, was ready to expand her optometry practice to a new location, her lender informed her of the 504 Loan Program as an alternative form of financing.  "While I did have the necessary funds to purchase and improve a property using conventional financing, the 10% down payment and 20 year low fixed rate on 40% of the loan were very attractive", Dr. Kim stated.  "Furthermore, I anticipated that I may need some cash reserves after moving to a new location, so the 10% down payment really helped alleviate cash flow concerns if they were to arise."

Growth Corp teamed up with Village Bank & Trust to make this expansion possible. 

 

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Q & A

• We have a borrower who already started construction...is it too late to use the 504?

Not necessarily.  The 504 can take out 30-40% of a project that is currently in its interim construction phase, slashing the risk for your bank.  Since our closings can't happen prior to all construction being completed, it gives us the opportunity to still come into a construction project after it has started...and possibly even after its completed...as long as it is still financed with a construction/interest only loan.

• Can soft costs be rolled into the 504?

Yes.  The 504 enables borrowers to include renovations, closing costs, and other soft costs along with furniture, fixtures and equipment in the financing package.  And, expenditures within 9 months of the date of the application, including land and buildings, and/or equipment, can be included in the project costs and be reimbursed by the interim lender net of the borrowers equity injection.  Costs incurred prior to that day may be included solely at the SBA's discretion.

• What are the occupancy requirements?

For an existing building, a small business must occupy 51% and may lease up to 49%.  However, for a newly constructed building, a small business must occupy 60%, may lease 20% long-term and lease 20% with the intention of using some of the 20% within three years and all within ten years.

 

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