Earlier this year, Mayo Auction and Realty Inc. was planning to move their location out to Belton, MO. We learned they were doing some significant improvements to the building they were leasing, which was nothing more than warehouse office space. President Robert Mayo and CFO Reggie Gabriel explained the amount they were spending on the improvements and were unaware of the SBA 504 loan provisions that allow these improvements to be counted as cash injection toward a potential purchase of the building. Fortunately, there was a buyout option of their current lease on the building, which would save them money, as they wouldn’t have to come up with any additional down payment.
Mayo Auction and Realty, Inc. worked with UMB Bank to submit the improvement invoices and move forward with a loan application with the SBA. They were approved for the acquisition of their building in early April and closed at end of April 2013. Their grand opening was the first week in May to a packed house. “Tom Kenagy of the EDC was great to work with and was so very responsive in every way,” says Steven Kyser with UMB Bank. “I can’t say enough good things about the process with the EDC.”
The 504 loan will allow for a bank to retain 50 percent of the total funding project, the SBA to retain 40 percent with the business having 10 percent cash injection. The biggest advantage for the business is that they can take advantage of long term fixed financing for 20 years on 40 percent of their loan. “My clients were thrilled to learn of their approval through UMB and the SBA. They are excited to be able to start earning equity right away in their new building, which is exactly where they want to be in the city,” says Kyser.
The SBA 504 loan program is a great asset to small business owners throughout the United States. CLICK HERE for more information about the program.