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Saturday, Aug 13, 2022
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504 Loan Program to Help Companies Buy Facilities

By Thom Senzee Contributor There is a bright new light at the end of the tunnel for business owners looking to find funding for the purchase of a building, store or warehouse thanks to the recent arrival of so-called 504 loans at the Valley Economic Development Center. “This is extremely important and it couldn’t come at a better time,” said VEDC president, Roberto Barragan. The U.S. Small Business Administration has offered these types of loans to businesses for decades. However, until VEDC’s affiliate program, known as the San Fernando Valley Financial Development Center (SFV-FDC) received approval last month to become a certified development company, 504 loan activity in the region was limited. Barragan expects his organization to support more than $25 million in new loans during the coming year. He expects that number to grow to $50 million annually after the first year. This year, Mr. Barragan said, SFV-FDC will target as many as 30 businesses for 504 loans, the proceeds of which must be used specifically to purchase physical facilities. With advantages such as significantly lower interest rates , 10 percent, as opposed to rates as high as 30 percent in the private market , 504 loans could mean the difference between flourishing and failing for some businesses. “I’ve seen some companies turn around, crash and burn, and ultimately die because a landlord decides to do something different with the property, or double the rent at the end of a lease,or simply not want to renew a lease,” Barragan said. “Owning their building means small and medium-sized businesses will be able to control their own rents and have more control over costs in general,” he added. As administrators of other government-sponsored business loan programs, SFV-FDC has helped 164 local firms secure more than $30 million in loans. That, VEDC officials say, has helped retain 3,200 jobs in the region. “We are proud to welcome SFV-FDC to our family of CDCs providing lending services to our local entrepreneurs,” said district director for the Los Angeles Office of the SBA, Alberto G. Alvarado. Stating that he believes there has been an unmet need in the San Fernando Valley region. “SBA applauds SFV-FDC for their expressed willingness to fund underserved businesses in the greater San Fernando Valley,” he said. The owners of a company that recently went through the process of buying a new facility in Chatsworth said they would have liked to have access to a 504 loan when they embarked on their purchase. “It’s expensive to borrow money,” said Susan Marsicano, owner of Wilshire Refrigeration. “I think if I would have had access to a lower-interest loan we could have saved some money on our investment.” “Getting the first CDC in the Greater L.A. area in 25 years is the result of over five years of work by the board of directors and my staff,” Barragan said. “It will be huge for helping businesses stay and grow and create jobs, while improving the local economy.”

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