Stimulating Small Business Growth In Monroe County
The SBA 504 Program offers long-term, fixed-rate direct loans to small businesses to stimulate their growth, and to preserve or create employment opportunities. Funds may be utilized for the purchase of land, buildings, machinery and equipment, construction expansion, renovation, and modernization.
Funding for SBA 504 loans is provided through a partnership between the SBA and a private-sector lender such as a bank. Under a typical SBA 504 scenario, 50% of the financing for the project is provided by a bank at a rate determined by the bank, 40% is provided by the SBA through MCIDC in the form of a fixed-rate SBA guaranteed debenture, and 10% in equity is provided by the business concern. The SBA can guarantee payment of debentures for as little as $50,000 and up to $1,000,000, and for women and minority-owned businesses, the maximum debenture is $1,300,000.
Who Qualifies?
For-profit enterprises with:
- A net worth not exceeding $7 million;
- An average net profit, after taxes, of less than $2 million over the last two years;
- Less than 500 employees.
The SBA requires that for every $50,000 in SBA 504 funding provided, there is at least one job created. Job creation requirements must be met over a two year time-frame.
The interest rate charged on the bank’s portion of the financing is at the sole discretion of the bank involved in the transaction, but should generally be lower than traditional mortgage financing because of the bank’s reduced credit exposure. The rate on the SBA’s portion of the loan is fixed and is based on a spread over the current rate for five and ten year treasury notes. The term for real estate loans is generally 20 years, and the term for financing equipment purchases is generally ten years. The term of the SBA 504 financing must be matched by the bank involved in the project with no call provisions on the bank’s portion of the loan.
Revolving Loan Fund
The Revolving Loan Fund can be used to assist expanding businesses with gap financing for fixed assets and working capital. Lower interest loans are available up to $75,000 with a term not to exceed seven (7) years.
Economic Development Success Stories
Read about several local companies including Goldwell of New York, Inc., Northern Soy, Polyshot, St. John Fisher College, and Dixon Schwabl, that have successfully utilized funding and incentives provided by Monroe County.
Goldwell of New York, Inc.
When Steve Neumaier, President of Goldwell of New York, Inc. received the EquiPlus postcard in the mail, the timing could not have been better. The new EquiPlus program combines the investment incentives of the GreatRate and GreatRebate programs with the sales tax exemptions offered through the County of Monroe Industrial Development Agency (COMIDA). Mr. Neumaier was considering a nearly $60,000 upgrade to his computer system to accommodate the continued growth in his wholesale hair care product business.
Mr. Neumaier was very familiar with the benefits offered by COMIDA. In 1995, Goldwell had grown to 13 employees and needed room for expansion. A COMIDA sale/leaseback arrangement was used to construct a new 15,000 square foot headquarters facility on Brighton-Henrietta Townline Road in Henrietta. COMIDA also provided tax exemptions and abatements when the growing company added a 10,000 square foot addition in 2000.
Using the EquiPlus sales tax exemption, Mr. Neumaier estimated savings of over $4,900. Additionally, the company will receive a $4,000 GreatRebate at the end of two years, provided the company has increased the number of full time employees by 10%. The company currently employs 22 within Monroe County.
Northern Soy
Twenty-four years ago there wasn’t a lot of choice in foods if you were a vegetarian. Norman Holland and Andy Schecter decided to go into business to increase their choices and the choices of the growing number of people interested in going meatless.
Northern Soy makes and distributes tofu and tempeh under it’s SoyBoy brand as well as many private brands. It also makes vegetarian hot dogs, burgers and tofu ravioli. Its unique business and accomplishments have caught the attention of The Wall Street Journal and NASA.
As the company outgrew its space, Monroe County put together a package that included a Sale Lease Back arrangement, a Community Development Block Grant Loan, and a Jobs Plus tax abatement.
Polyshot
What is the story behind a Rochester company that is one of its kind out of 50 worldwide and one of just several in the United States?
When Polyshot experienced difficulty with a product it was buying from others, it went to work and developed its own line of products.
As a result, Polyshot grew from a company working on two folding tables in two rooms with two computers and two phones to a profitable company that now has 17 employees, a brand new building, and sales representatives around the world.
Polyshot provides injection molding equipment to the plastics industry using a runnerless molding system which eliminates wasted material.
To do all of this in a sparkling new 13,000 square foot facility, Polyshot sought help from the county. Through MCIDC, they secured an SBA 504 loan toward financing the building and used the GreatRate program toward the purchase of equipment. A sale leaseback arrangement through COMIDA was used to save on sales tax, mortgage recording tax, and provided them access to JobsPlus.
St. John Fisher College
St. John Fisher College was established in 1948 to provide a traditional education in the humanities, social sciences, sciences, and business. Its goal was to create an educational environment that would enable Fisher graduates to succeed in life and help strengthen the fabric of the Rochester community.
Today the college welcomes 1,950 full-time and 600 part-time students in 24 undergraduate majors and 12 graduate studies. Enrollment is the highest its ever been. And with 1,050 in residence, the college is bursting at the seams.
The college went to Monroe County for a Civic Facility Bond to build a dormitory next to its new stadium which hosts the Buffalo Bills Training Camp. The bond also went towards infrastructure changes in parking and roadwork.
Dixon Schwabl Advertising
After leasing space for more than five years, Lauren Dixon and her husband Michael Schwabl decided it was time to move their premier advertising agency to their own facility. They approached Monroe County for assistance in the financing of a new 18,000 square foot facility located in Fairport.
By utilizing both the SBA 504 program and a sale/leaseback through COMIDA, Dixon Schwabl was able to save on mortgage recording tax, sales tax on construction materials, and access the JobsPlus tax abatement program.
In addition, Dixon Schwabl secured fixed-rate financing on 40% of their project through the SBA 504 program and only needed a 10% down payment. HSBC bank financed the remaining 50% of the project cost. Dixon Schwabl has already added 36 employees bringing its total staff to 54.
