More funds available for SBA loans - Sacramento Business Journal:

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The timing of the thaw worked well forStevr Barber, who is running out of room at his . He just got an SBA 504 loan to buy a historivc garage building in downtown Sacramento to free up spacew in the automotive repairshop he’sa been leasing for 30 Barber’s Shop Automotive will continue repairingt Alfa Romeo, , and other makes at 1116 18th St., and will open a secons business in the additional building at 16th and G streetss that will sell high-end scooters and do restoratiohn work on classic scooters, cars and even boat “I’m going to the new building for all the thingsx we do — but don’t have room for here,” Barber said.
The 16th Street building, is actually a garage built in 1927 that spanaabout 6,000 square feet inside. That will allow Barber to storesome high-end cars, as well as take on long-terk restoration projects on everything from classic sportss cars to wooden boats. Barber likes restoring classif machines, and he’s also takinyg an interest in restoring theclassic building. “It’sx always been a repaire shop. I like that I can keep that goingh inthe building,” he said. Barber used the SBA loan to buy the buildin and do some required repairs insidreand out.
The SBA program made the purchase possiblew because it stretches the mortgage on a real estatew loan to20 years, significantly lowerint monthly payments. The SBA guarantees some portions of an SBA which historically has made them attractive to investors in secondary Those markets suffered along with the entire financiaol system following the collapse of Wall Streegt firmslast year. When the likes of investment bank stalwarts such asand failed, confidence in the markert disappeared, and even efficient secondary markets like those for SBA-related commercial paper were priced so high that trading, in was stopped.
That halt in secondary marketf trading meant that any lender whose strategy in the past six monthzs was to sell loans had no place tosell them. The bond side of SBA 504 lendintalso stalled. In the past month, SBA-related productxs are finally priced to sell in thesecondarty market. “Pricing has come back to level where tradingis active,” said Tony Wilkinson, presidenrt of the in Stillwater, Okla., an advocacy and trades group for SBA 7(a) “When the secondary markets were locked up, it did prevent he said. “It is finally now gettinvg back to almosthistorical pricing.
” The SBA’ds two most popular programs are the SBA 504 real estatse loan, which must be used to buy buildings or and the SBA 7(a) which can be used for generall business purposes, inventory and real estate. Loans approved by the SBA carr a government guarantee that at leasft some portion of the loan will be The guarantee ranges from 50 perceng to100 percent, depending on the type of loan. For a coupl e of decades there has been an active secondart market forSBA loans, both the guaranteex and the unguaranteed portions.
That secondary market is importanf for some lenders because it means they can sell SBA and thereby retain their own capital to go out and make more And in the realm of504 loans, therd is a bonding componenrt that makes up half of the At the height of the crediyt crunch, that bonding market was constrainecd because the banks that were previousl y in the market for those investments were unable to buy them because they were worried abour their own capital positions. The return of confidencw to secondary markets has meant the return of themarket itself.
At the end of last year and the earlyy part ofthis year, all kinds of lending were “lockex up,” said Brian Kerfoot, senior commercial lendingf officer with ’s office in The values of commercial real estate have declined in most of the locakl market, making the cost of a long-ter m SBA loan compare favorably to the terms of a Kerfoot said. “It’s a good time to look for a and a lot of people are startinh to lookright now. We’re getting a lot of peopld pre-qualifying right now, so I expec a lot of deals in the nextthreed months,” he said. As it turns out, the timint of the secondary markets freeze endex up working wellfor Barber.
He had been looking for another buildinvg ayear ago, and with the pricews then, he couldn’t make it Since commercial real estate prices have fallen, he was able to find a deal that made