Maureen Tinen, President

From Tenant to Owner with SBA 504 Loans 

Is Shared Work Space Right for You?

Bayonne Bridge Project Looking for Contractors

Start Planning for Small Business Saturday

Free Websites for Small Businesses  
Microloan success story

From Tenant to Owner:  make the move with our new SBA 504 loan program      

If you've been dreaming about owning your own building or expanding your current location, but didn't think you had enough cash to make it a reality, UCEDC's new SBA 504 loan program may be the answer. Twenty-year fixed rates combined with as little as 10% equity can put building ownership (or a major equipment purchase) within your reach.

Conventional real estate loans typically call for a 25-30% down payment along with rates that re-set every five years or so. Add in soft costs, like architectural plans and environmental studies, along with attorney and closing fees and you've tied up a lot of cash.

SBA 504 loans, on the other hand, are designed to preserve working capital through low equity contributions, long-term fixed rates (at publication:  4.7%), and financing of soft and closing costs. The goal is to encourage growing businesses to expand and create new jobs by giving borrowers an affordable path to real estate ownership.

How does it work?

504 loans are based on a 50-40-10 split of the project costs among a commercial lender (usually a bank), UCEDC - acting as a SBA intermediary, and the borrower. The borrower contributes 10% of the project (higher in some circumstances). The bank finances 50% of the project and takes a first lien on the property. UCEDC finances up to 40% of the project and takes a second lien. Two distinct loans are issued, each with their own terms and interest.

"The structure of the loan may be a little disconcerting to a borrower at first glance," says Ellen McHenry, UCEDC's senior director of financial programs. "But when you start adding up the cash savings associated with a 10% down payment vs 30% and account for the certainty of 20-year fixed rate payments on our share of the financing, the benefits of the 504 program really make sense."

Building the business

Funds from the 504 loan program can be used to purchase, build or renovate owner-occupied property or to purchase long-life machinery. Most private, for-profit businesses with $5 million or less in net revenue are eligible to apply.  

"A small business that is ready to commit to its location is typically a small business that is ready to grow," says McHenry. "Every dollar that isn't being tied-up with the loan is a dollar that can be invested in jobs and other business-building tactics."

Getting Started

Think you're ready to take the building ownership plunge? Be sure to read the detailed information on the SBA 504 Loan Program on our website. Then call - 908-527-1166 - to speak to one of our loan officers to learn more about the application process.

You can also start the process by talking to your business banker. Ask to see how the 504 loan program stacks up against other loan options so you can make an informed decision.

With loans from $500 to $5 million, UCEDC can help at any stage of business development.  Learn more about all of our loan products. 

 Back to top

Is a Shared Work Space Right For You?

Another example comes from a former UCEDC Entrepreneurial Training participant, Mukesh Patel, who recently launched a technology-focused shared work space in Somerset, NJ. Patel, a serial entrepreneur himself, attended UCEDC's training course to get a better understanding of the opportunities and barriers that start-ups face in this economy. Armed with that intelligence, Patel and his partners founded JuiceTank Innovation Lab.   

"We've created an open, creative, collaborative environment for entrepreneurial tech and consumer product companies to feed off of each other's passion.  But we take it one step further for our tenants, by investing seed and follow-up capital, developing soft-tech and mobile apps for start-ups, offering advisory services, and collaborating with other investment groups to give these businesses every chance to succeed," says Patel.

Access: a more formalized approach to mentorship and access to resources and investors can be found among the membership of the non-profit New Jersey Business Incubator Network (NJBIN). These incubators are typically associated with a community college or university and require their tenants to demonstrate significant potential to grow their business and contribute to economic development. In addition to typical work space and office services, NJBIN members can provide lab and pilot production space.

"We know that the first four years of development for entrepreneurial operations are very important, with lifelong implications. We work intensively with our tenants, providing coaching, mentoring, introductions to potential partners and investors, and opportunities for collaboration with other tenant companies throughout the network, says Suzanne Zammit, NJBIN President. "Our job is to get them to the point where they are ready to leave the 'nest' and thrive on their own."  

So whether you're looking for a professional space to call your own for a day or a supportive network for a few years, there's likely to be a shared office space option that's right for you. Learn more about the shared office space sources in this article:

Regus: Visit their website 

Business Development Center at Interfaith Neigbors: Visit their website 

JuiceTank Innovation Lab: Visit their website,read a Star Ledger article, and read a blog post  

NJ Business Incubator Network: Visit their website

Back to top

Bayonne Bridge Project Looking for Small Business Contractors 

In case you haven't heard, the Port Authority of NY & NJ is planning to raise the roadway of the Bayonne Bridge to allow larger ships to get access to the Port. This multi-billion dollar project will have a profound impact on the local economy and there are opportunities for small businesses to become part of this historic project.

The Local Business Enterprise (LBE) program requires the general contractor - who has not yet been named - to make a good faith effort to utilize local businesses as subcontractors in services ranging from engineering to food vending. The Port Authority is holding meetings around the area to provide more information to small businesses on how to get involved with the Raise the Roadway project.

The next meeting is scheduled for Wednesday, November 7 in Newark. Registration for that event along with the schedule for future meetings can be found here.  

Back to top

Free Websites for Small Businesses Thanks to Google

There's simply no excuse...Every small business needs a website, no matter what they are selling. With 97% of Americans using the Internet to research products and services, having a website is now as vital and expected as having a phone.

Now, recognizing that concerns over price and complexity may prevent NJ small businesses from launching their business websites, Google is offering a variety of free services to get New Jersey online.

Small businesses that register at the Get Your Business Online website can get access to easy-to-build website templates, website hosting for a year, customized domain name, and online technical support - all at no cost!

A newly added feature is a free business listing on Google+, which helps potential customers find your business when they search for local products and services. Your page will show up on Google Maps, Google search results, and on mobile devices like phones and tablets.

Get started today at www.NewJerseyGetOnline.com 

Back to top 

UCEDC Happy to Lose Client to Bank

In 2008, Tihuma Technology started with a microloan from UCEDC and the energy and enthusiasm of its three partners. In 2011, it obtained private financing to acquire another company and become iMedia. And this year, it's achieved the holy grail for small businesses: a line of credit from a bank.

It may not seem like such a big deal, but as Chuck Titone, Joel Macalusco and John Huffstutler know, it means that the establishment believes in you.

UCEDC has always believed in the trio and banked on their success in 2008 with a microloan to get them going. But Titone notes that "their intention (UCEDC's) was always to get us to the point where we could get conventional financing." So when the line of credit came through, the first thing iMedia did was pay off their UCEDC loan and send a note of thanks to Ellen McHenry, the organization's senior director of financial programs.

"It was a good feeling," says Titone. "It was reinforcement that we had succeeded in building a financially sound company" Their solid reputation and the line of credit allowed them to hire a vice president of sales away from an industry-leading company.

iMedia is on a growth spurt. As a technology firm with a focus on mobile applications and monetizing the explosion in social media, they are in demand. The acquisition nearly doubled their size, increased staff, enhanced resources and added significantly to their client base.

Through this growth spurt, Titone and his partners have continued their relationship with UCEDC. "Ellen (McHenry) has always been helpful and willing to offer advice. It was great that they saw the promise in us, but also great that they have been a place we can go to for advice, a different perspective and a chance to connect with contacts and people who can be helpful to us."

Read the whole story. 

Back to top