Florida First Capital, a statewide non-profit certified development company, attained the top SBA lender spot for producing 113 loans totaling $77,397,000.  The company was acknowledged for its accomplishment during the SBA’s 21st Annual Small Business Week celebration held recently in Jacksonville.

During this century, Florida First Capital has held the top SBA lender position in the district every year but one among a distinguished list of banks, credit unions, non-bank lenders and other certified development companies.

The SBA 504 Loan Program offered through Florida First Capital offers up to 90% financing at below-market, fixed interest rates with amortization terms up to 20 years.  504 loan proceeds may be used to finance the purchase of major fixed assets, including owner-occupied commercial real estate and/or heavy duty fixed machinery and equipment.

“The 504 Loan Program provides affordable financing to small business owners allowing them to grow and expand, which in turn creates jobs, revenue and stronger communities,” said Todd Kocourek, President & CEO of Florida First Capital. “Our professional staff works hard to ensure the 504 Loan Program is available to small businesses in all 43 counties of the North Florida District.  It is their perseverance that made this and our prior accomplishments possible,” Kocourek said.

Florida First Capital wishes to thank its 504 commercial lending partners as well as congratulate its North Florida District Sales Team: Kristen Tackett, VP & Loan Officer, Northeast Florida Region; James Hosman, VP & Loan Officer, Northwest & Florida Panhandle Region; and John Hanrahan, VP & Loan Officer, Central Florida Region.

For more information, email info@ffcfc.com or call 850.681.3601 or toll-free 888.320.5504.

The debenture bonds that funded April’s 20-year 504 loans were sold to investors at 2.08%, the second lowest rate in program history and just shy of the record of 1.93% set in December. This resulted in a final effective interest rate – the rate borrowers pay including servicing fees – of just 4.16% fixed.

So far this year, the 20-year effective interest rate has averaged just 4.24%. Last year, the 20-year rate averaged 4.45%.

(Understanding the 504 Loan Interest Rate)

Frank Keane, fiscal agent for Development Company Finance LLC – the entity responsible for marketing and selling 504 funding securities – commented at the beginning of the year that 504 rates were likely to remain low in 2013 based on continuing bond market conditions. He estimated the 20-year effective rate should be around 4.5% on average.

Keane said this month’s rate drop follows that trend and is the result of lower Treasury rates fueled by renewed concern for European fiscal responsibility in Cyprus, coupled with the Bank of Japan’s Qualitative and Quantitative Easing policy.
“(This) moved Treasury rates lower by 20 bps since our March sale while widening Credit and Interest Rate Swap spreads. Yet demand for the 504 product’s Certificates allowed us to price this month at the tightest spread ever to Interest Rate Swaps, +13 bps, improving on the previous best spread from April 2007, 13.6 bps,” he said.

For those small businesses that have been considering purchasing, building and expanding their facilities or upgrading their fixed equipment, now is a great time to act.

504 loans are paired with private-sector commercial loans, providing up to $5 million of small business financing for standard projects and up to $5.5 million for green initiative and small manufacturer projects (SBA loan portions only; there is no limit on overall project dollar size). (Getting Started on a 504 Loan)

The 504 program is an equally great loan product for commercial lenders.  Under the program’s unique distributed credit structure, our commercial lending partners get a 50% loan-to-value first lien position on the assets being purchased – cutting their risk in half.

Florida First Capital provides SBA-backed financing up to 40% of the project cost and takes a second lien position, and the borrower provides a 10% down payment in most cases.  No other loan program offers this type of risk security to a lending partner.

There is just no better deal available today for the purchase of real estate or for expansion of existing facilities. Small business owners who are seeking financing for commercial real estate or fixed equipment purchases are urged to contact a Florida First Capital loan officer today to take advantage of these great interest rates.

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

Each year presents new opportunities to gather and present information. Advocacy’s contract research in FY 2012 addressed such key topics as immigrant small business owners, federal small business contracting, small business innovation in green technology and state-level small business patterns. Contract research also addressed the perennial question of the small business contribution to U.S. GDP.

In addition, Advocacy economists made important original contributions to research. The small business primer, “Frequently Asked Questions about Small Business,” doubled in size and content.  Quarterly reports on small business lending and status, plus extensive firm-size data from key federal data agencies were presented online.

Two new ventures helped answer complex questions and direct users to the data they need:

• Small Business Facts. These one-page discussions explain multifaceted small business topics. Eight were published in FY 2012, and they covered startup rates, job creation, health insurance, credit card financing, business definitions, gender differences in startup finance and business survival. Additional installments in the Small Business Facts series are planned.

• Small Business Data Resources. The most popular research tool introduced in FY 2012 was Small Business Data Resources, a listing of online databases by federal agency or private sector source. This matrix of sources, topics and databases provides links to dozens of specialized data websites.  Key topics include demographics, employment, exports, finance, firm-size data, firms and establishments, health care, income and sales, pension coverage, taxes and training. It has proved invaluable to researchers, policymakers, small business trade associations and members of the media interested in small businesses’ role in the economy.

In addition, Advocacy’s economists fill the ongoing need of evaluating the impact of regulatory proposals on small businesses. In all of these areas, they continue to find new, compelling ways to analyze and present insightful data.

The Annual Report of the Office of Economic Research, FY 2012 can be found at http://www.sba.gov/advocacy/7540/428261.

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

A - While Standard Operating Procedure (SOP) states that servicing actions should not be considered until a 504 loan has become seasoned (at minimum, in the funded portfolio for four years), the SBA will consider adding a Guarantor at any time after funding provided the Guarantor meets the same eligibility requirements that would be a part of the 504 application process.

Documentation needed for this servicing action is as follows:

1. Completed and signed SBA Personal History Statement (Form 912).

2. Joint Personal Financial Statement and the most recent year-end tax return (if the individual(s) will have greater than 20% ownership) in the EPC or OC.  Note: if the loan is not seasoned, the Guarantor must meet the SBA’s Personal Liquid Resources Test or an explanation is required.

3. If applicable, verification of Legal Permanent Resident Status.

4. Upon SBA approval, a signed SBA Form 148 SBA Guarantee must be executed.

The less time the loan has been in the funded portfolio, the more stringent the SBA is going to look at the request to ensure the new request does not affect applicant eligibility.  As always, final approval of the request is at the sole discretion of the SBA.

If you have a question you’d like our SBA 504 loan experts to answer, email us at info@ffcfc.com or call 850.681.3601 or toll-free 888.320.5504.

The Florida House Economic Affairs Committee voted on April 16 to make Florida more competitive by supporting Gov. Rick Scott’s call for elimination of the tax (HB 391). The bill now moves to the House floor for a full vote.

Currently Florida is the only state on the Atlantic seaboard and on the Gulf coast that charges sales tax on manufacturing equipment and this makes Florida less competitive.

The Governor hopes the tax break will help bring more manufacturing firms to Florida, creating jobs in a critical industry for the state. Florida is home to more than 17,500 manufacturing companies, employing more than 300,000 Floridians.

The tax break in conjunction with up to 90% below-market, fixed interest rate financing under the Small Business Administration (SBA) 504 Loan Program for the purchase and installation of new or used fixed machinery and equipment is a win-win for growing and expanding manufacturers in Florida.

Under the 504 Loan Program offered through Florida First Capital, manufacturers put down as little as 10% on fixed equipment purchases with amortization terms of 10 and 20 years available. 504 equipment projects begin at $125,000 and associated fees and soft costs can be financed in the loan to minimize out-of-pocket costs.

“Other states do not charge a sales tax on buying machinery and we’ve got to do the exact same thing. Florida’s current policy puts our state at a competitive disadvantage because most states do not force manufacturers to pay taxes on the purchase of equipment or require them to adhere to regulations for tax exemptions,” said Gov. Scott. “Building up Florida manufacturing is about building Florida jobs across our state.”

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

The company, which focuses on the science of consumer persuasion, worked with Kristen Tackett, Florida First Capital Vice President and Loan Officer for Northeast Florida, on the $5.1 million 504 loan project.

Proceeds from the 504 loan will be used to purchase and renovate an existing 22,453 square-foot office building on a 101,930 square-foot site and a 60,113 square-foot adjacent vacant lot to be used for overflow parking.

Proceeds will also be used to purchase furniture, fixtures and equipment and to cover professional fees and interim points and costs, thus reducing the company’s cash outlay helping to preserve working capital.

With the expansion, the company plans to add 50-75 jobs for a total of almost 170 employees.

MECLABS was founded in 2002 and is the world’s largest independent research lab focused exclusively on marketing and sales.

It specializes in conducting real time marketing testing, including e-commerce, email, online/website, search engine and subscription marketing concepts and trend analysis.

Clients include Bank of America, The Economist, The Wall Street Journal, The New York Times, ING Direct, Google, Intuit, McGraw Hill, Royal Bank of Canada and Toll Brothers Builders, to name a few.

The company operates in more than 60 locations, with its two main facilities located in Jacksonville and in Minneapolis.

The company’s new Jacksonville location will also expand the operations of its related businesses, including MECLABS Institute, LLC, MarketingSherpa, LLC, and MarketingTouch, LLC.

Visit MECLABS online at www.meclabs.com.

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

What Is the 504 Bridge Loan Program?

Under the Small Business Administration (SBA) 504 Loan Program, Third Party Lenders (e.g., banks, credit unions, non bank lenders) partner with a certified development company (Florida First Capital) to provide small business owners with up to 90% financing for the purchase of owner-occupied commercial real estate and/or fixed machinery and equipment.

Typically, a 504 loan is structured whereby a Third Party Lender finances 50% of the project and holds the first mortgage.  Florida First Capital/SBA finances 40% of the deal and holds the second mortgage.  The borrower provides a 10% down payment.

While the 504 loan is permanent, there is a gap between initial closing and the SBA “takeout” of the 40% second mortgage resulting in the Third Party Lender providing interim financing for the entire project.

As part of Florida’s participation in the State Small Business Credit Initiative (SSBCI), the 504 Bridge Loan Program addresses this timing difference by reducing the interim risk for Third Party Lenders.

Through a Participation Agreement with Enterprise Florida, Inc., the 504 Bridge Loan Program provides Third Party Lenders with loan proceeds (SSBCI funds) for the interim financing until the permanent SBA 40% second mortgage takeout occurs.

What Is Florida First Capital’s Role in the Program?

504 bridge loans are processed by Florida First Capital, working in conjunction with Enterprise Florida.  Florida First Capital underwrites, prepares loan documentation, coordinates closings and provides bridge loan servicing.

What Projects Are Eligible for the 504 Bridge Loan Program?

Bridge loan funds may be used for interim financing on authorized SBA 504 loan projects including owner-occupied commercial real estate (turn-key acquisitions, renovation or build-out projects and ground-up construction) and/or fixed machinery and equipment purchases.

On ground-up construction projects, it is the responsibility of the Third Party Lender to manage the construction through completion or hire an approved third party vendor to manage construction through completion.

What Are the Terms, Interest Rates and Fees?

Loan Sizes – $250,000 (recommended minimum) to $5 million (legal maximum).

Term – The normal term permitted is six (6) months; however, the Participation Agreement allows for extensions with pricing adjustments.

Interest Rate – The interim loan and note bear interest at a rate at least equal to the rate applicable to the term loan.

Loan Fees – The Third Party Lender agrees to pay Enterprise Florida an amount equal to one half of the origination fee attributable to the interim loan or .25% (one quarter of one percent) of the principal sum of the interim loan, whichever is greater. If upon the expiration of the six (6) month term the 504 loan has not funded, the term will be automatically extended under the following conditions:

During the first six (6) months of the extension of the term, 100% of interest payments on the interim loan will be due to Enterprise Florida. Should further extension be required beyond the first year, such extension will be automatically granted in consideration of a one-time increase of 2% in the rate of interest payable to Enterprise Florida on its interest and a payment to Enterprise Florida of .25% of the principal sum of the interim loan at the beginning of each six (6) month extension beyond the first year of the term.

Servicing Fee – The Third Party Lender is entitled to retain a servicing fee during the first six (6) months of the interim loan provided the interim loan is not in default. Such servicing fee is a portion of interest payments made by the borrower equal to 1.25% divided by the non-default annual interest rate payable on the interim loan.  For example (assumes an interim note rate of 5% and a borrower interest payment of $1,000): servicing fee = 1.25% / 5% = ¼ or 25% of payment ($250) retained by the Third Party Lender. The Third Party lender will remit the 5% less the servicing fee monthly for six (6) months.

Repayment – Bridge loan funds are repaid to Enterprise Florida through takeout via the 504 loan.

How Does the Process Work?

Following the normal underwriting and approval process of the SBA 504 loan, Florida First Capital distributes a borrower certification and lender certification for signature.  The Third Party Lender will need to provide Florida First Capital with their internal credit write up and commitment letter and complete an IRS Form W-9.

If the project includes any renovations or construction, the Third Party Lender will need to provide Florida First Capital with their internal construction monitoring and disbursement policy. The contractor will need to supply a resume, proof of insurance or bond and estimate of time-frame for project completion.

Once the bridge loan documentation is completed, it is sent to Enterprise Florida for review.  Following Enterprise Florida’s approval, a Participation Agreement between the Third Party Lender and Enterprise Florida is executed and 504 bridge loan funds are dispersed.

How Do I Apply for a 504 Bridge Loan?

Interested Third Party Lenders should contact a Florida First Capital loan officer for an application and other required documents.  Click here to locate one of our loan officers in your local area.  Phone: 850.681.3601 or toll-free 888.320.5504.  Email: info@ffcfc.com.

The SBA also said it has reduced staffing levels enough through early retirements to avoid furloughs.

The SBA expects to meet current loan demand primarily due to the expiration of its temporary 504 Debt Refinancing Program six months ago, which freed up available lending capacity for its other programs, Mills said.

However, a recent push in Congress by the National Association of Development Companies (NADCO) and the 504 industry to revive the popular 504 Debt Refinancing Program could affect the SBA’s long-term lending ability until a federal budget deal is reached.

Recent legislation (S.289 or the Commercial Real Estate and Economic Development (CREED) Act of 2013) filed by U.S. Sen. Mary L. Landrieu (D-LA) and Sen. Jeanne Shaheen (D-NH) provides for a five-year extension of the program, which expired on Sept. 27, 2012. House small business leaders Rep. Tom Petri (R-WI) and Rep. Judy Chu (D-CA) have also signed on in support of the bill.

The 504 Debt Refinancing Program allowed small businesses with eligible commercial real estate mortgages and other major fixed asset debt to take advantage of stable, long-term and lower cost 504 financing and thus avoid potential foreclosure on mortgages that were based on inflated values.

The program was originally enacted as part of the Small Business Jobs Act of 2010, but did not become fully operational until February 2012, significantly shortening the period of time that businesses could use 504 loans to refinance qualifying existing debt before it expired.

During that time, however, out of the $15 billion authorized for debt refinancing, more than 2,700 businesses borrowed $2.5 billion to refinance old, expensive debt to unleash capital that was reinvested into their businesses to create and sustain jobs. The measure literally saved thousands of businesses in communities across the country during the recession, helping them accelerate the economic recovery.

The five-year congressional extension of the 504 Debt Refinancing Program could offer capital access to thousands of additional businesses across the country, saving them up to $20,000 each per month.

“While Congress may be divided on many issues, everyone can agree on a zero-cost, smart mechanism like the CREED Act to help small businesses access capital to create the jobs America needs,” said NADCO President & CEO Beth Solomon.  “Extending the SBA’s highly successful 504 Debt Refinancing Program would unleash billions of dollars in capital currently locked up in the assets of our nation’s small businesses. This is a no-brainer for both sides of the aisle,” she said.

Click here to find a “talking points” document that provides information that you can send to your legislators to support renewal of the 504 Debt Refinancing Program (S.289/CREED Act).  Click here for an online directory of Congress.

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

The proposed new measures follow extensive consultations with lenders and borrowers to identify the greatest challenges they face and find ways to reduce barriers to making and accessing 504 and 7(a) loans, while still maintaining strict oversight.

Eliminating the Personal Resource Test
A borrower will no longer be required to obtain a maximum level of personal finance resources for a 504 or 7(a) loan. This will streamline the loan process by eliminating complicated regulations used to determine the amount of collateral required.

Revising the Rule on Affiliation
Revising this rule will open access to SBA loans to businesses that, under current rules, would not qualify as a small business under the SBA’s size standards by virtue of their association with other companies. It also would streamline 504 loan applications and reduce paperwork requirements for 504 and 7(a) loan applications.

Eliminating the Nine-Month Rule for the 504 Loan Program
Eliminating the nine-month rule removes a restriction that limits a business to include in its 504 project only expenses incurred nine months prior to submitting the loan application. The new rule would allow inclusion of expenses incurred at any time (e.g., projects put on hold for more than nine months due to a natural disaster).

Increasing Accountability of CDCs
Refocusing certified development company (CDC) corporate governance requirements will reinforce the importance of board accountability for CDC oversight for the 504 loan program and set in place measures to strengthen oversight in order to maintain program integrity.

Click here for comprehensive information on the new rules and their benefits.

Click here to access the document published in the Federal Register on Feb. 25, 2013.

The comment period for the proposed changes closes on April 26, 2013.

For more information about SBA 504 loans in Florida, contact a Florida First Capital Loan Officer here.  Florida’s original statewide SBA Certified Development Company (CDC).  Email: info@ffcfc.com.  Phone: 850.681.3601 or toll-free at 888.320.5504.

Jim had retired twice before he joined Florida First Capital in 2004 as a Senior Vice President. He worked primarily on special projects for the company out of its Jacksonville office.

Prior to joining Florida First Capital, Jim was a former President and CEO of the Jacksonville Economic Development Company (JEDCO) and had more than 40 years of experience in management, lending and loan workouts, finance, administration, marketing, sales and public relations.

We at Florida First Capital had the honor of working with Jim until his third and final retirement in 2009. We benefitted greatly from his vast commercial lending experience and his sage wisdom.  He will be truly missed.

Jim’s memorial service was held in Jacksonville on Feb. 28, 2013.  Following is Jim’s obituary as published in the Florida Times-Union on Feb. 27:

Born in Middletown, NY, in 1935, he grew up in East Orange, NJ, graduating from C.J. Scott High as class salutatorian and winning the Bamberger Medal for top scholar-athlete in the city. He earned his B.A. from DePauw University where he was a member of Delta Chi fraternity. After seven years in the Navy as one of the Nation’s first Aerial Navigator and Tactical Coordinators in antisubmarine warfare, he was honorably discharged as a full Lieutenant.

He began his banking career with Barnett Banks and was president of several of their banks. He transferred his commercial banking skills into economic development and small business financing, first with the city (of Jacksonville), and ending his career as Senior Vice President of Florida First Capital Finance Corporation.

Jim was an active member of his church and many community organizations including serving as chair of Easter Seals drive, Big Brothers, Jacksonville Zoological Society, Jacksonville Urban League, WJCT Advisory board, and Ye Mystic Revellers. His avocation was singing; he had a God-given baritone voice which he used in the Good Shepherd choir and Jacksonville Symphony Chorus.

He is survived by his wife, Dale Orr Taylor; son Jerome Thompson Taylor (Kendall); daughters Susan T. Watson and Glenn T. Stanley (Craig); grandchildren Taylor and Katherine Watson and Griffin and Hunter Stanley; brothers Edwin Ted Taylor (Louise) and Thomas Taylor (Karon) and brother-in-law Jerome Jerry Orr.

Donations may be made to the Music Fund at the Church of the Good Shepherd, 1100 Stockton St, Jacksonville, FL 32204.