Let us partner with you on financing…
Big Sky Finance is here to partner with our lenders in order to provide the best long-term financing tool available to Small Business owners for their real estate and/or equipment financing needs. Leave the SBA paperwork to us – working together, we will make the process simple for you, so you are able to stay focused on serving your customers!
Big Sky Economic Development Corporation is a statewide certified development company licensed by the SBA to administer the SBA 504 Loan program in Montana. The SBA 504 Loan program is a direct SBA lending program designed to provide long-term, below-market, fixed asset financing to small, for-profit businesses. The SBA 504 Loan program represents permanent financing and is an economic development program utilizing job creation.
- Purchase land and improvements (operating company must occupy 60% of new buildings and 51% of existing buildings.)
- Construction of new facilities, or modernizing, renovating, or converting existing facilities.
- Refinancing of existing debt in some circumstances.
- Machinery and equipment with a minimum useful life of 10 years.
- Soft costs including but not limited to, title searches, appraisals, environment reports, architect fees, interim loan interest, certain bank fees, furniture and fixtures
- Working capital
Small Business Defined As
Tangible Net worth of not more than $15 million and 2-Year average Net Income after taxes less than $5 million.
Economic Development Requirements
- Job creation or retention (one job per every $75,000 borrowed from SBA 504), OR
- Public policy or community development goals met (various options available).
- Manufacturing firm (one job per every $120,000 borrowed from SBA 504)
Rates and Terms
- SBA rate fixed for the term of the loan (20-year rate is tied to the 10-year Treasury bond rate).
- The private lender sets their own rates and fees (commercially reasonable).
- Loan terms are 10, 20, or 25 years (Real Estate: 10, 20, or 25 year note, Equipment only: 10 year note).
Fees and Payments
- All SBA 504 loan fees are added to the loan amount and amortized over the loan term. One time processing fee of approx. 2.15% of SBA’s portions, loan closing fees of approx. $2500
- On-going service fee included in the effective full-term rate.
- Prepayment penalty for 1st half of term of SBA note—declining prepayment scale.
Example Of Financing On A Typical $1 Million Project
Total Project Cost:
|Acquisition of Land & Building||$800,000|
|Soft costs (appraisal, architect, engineering, closing costs)||$20,000|
|Entity||Loan Amount||% of Project||Security|
|CDC/SBA 504 Loan||$400,000||40%||2nd Lien|
|Borrower down payment*||$100,000||10%*|
* Start-up OR Special Purpose Building (i.e. car wash, hotel) requires 15% equity. Start-up AND Special Purpose Building requires 20% equity. Borrower down payment can be in the form of: cash, land equity, seller carry-back note (term must match SBA term and be subordinated to SBA if secured by project RE), or any combination thereof.
Typical Deal Structure For An Existing Business Would Be:
- 10% Owner Equity
- 50% Lender Financing (senior position on collateral)
- 40% SBA Financing (junior position on collateral)
Additional equity of 5% or 10% may be required—new business or special property.
SBA 504 Borrower Checklist Items needed for application.
- Business financial statements for the last 3 years, along with A/R and A/P aging reports
- Business tax returns for the last 3 years
- Business debt schedule
- Two years projected income statement with assumptions broken down by month for 1st year
- Interim financial statements within last 60 days
- Affiliated business – 2 years financials and current financial statements (if applicable)
Legal Entity Documents (as applicable)
- Sole Proprietorship – Assumed Business Name filing
- Corporation – articles of Incorporation & corporate By-Laws
- LLC – Articles of Organization & Operating agreement to Partnership – Partnership agreement
- Franchise agreement (if applicable)
Personal Information (for each 20% owner)
- Personal tax returns for last 3 years
- Personal Financial Statements (SBA Form 413)
- Personal History Statements (SBA Form 912)
- Copy of driver’s licenses
Real Estate Information
- Real Estate Purchase agreement or Settlement Statement
- Construction cost budget and / or equipment bids
- Existing Environmental studies
** All financial statements must be signed and dated by the applicants – please sign front page of all financials (tax returns, interim statements, personal financials, etc.)
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Kevin Gustainis, President
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Laura Johnson, Owner
The Firehouse Gym, Big Timber
Jeff Johnson, Owner
The Firehouse Gym, Big Timber