FDDC Blog

…Interest Rates!

Don’t leave your small business clients in a more vulnerable state than they need to be. By working with FDDC on an SBA 504 loan, you can guarantee your client a low fixed interest rate on 30-40% of their project costs.

With long-term rates at historic lows, it’s a good time for a small business owner to consider purchasing a building instead of leasing space for their business. First District Development Company provides up to 90% financing through an SBA 504 loan package to small businesses for the purchase and/or construction of commercial real estate.

Under the CARES Act, SBA 504 loan payments are being made for existing 504 borrowers for six months from April 1st to September 1st of 2020. This information refers to 504 borrowers whose loan closed in or prior to March of 2020. Just a reminder to these borrowers, your regular payments will begin again on October 1, 2020.

For 504 loans closed after April 1, 2020, your Payment Forgiveness dates will be slightly different. You will receive notices from FDDC when your payment status changes.

First District was recently notified of an approval of $1,560,000 to capitalize a Revolving Loan Fund (RLF) through the Department of Commerce’s Economic Development Administration (EDA) as a Coronavirus Aid, Relief, and Economic Security (CARES) Act Disaster Recovery and Resiliency Award. EDA’s overall mission is to lead the federal economic development agenda by promoting innovation and competitiveness, preparing American regions for growth and success in the worldwide economy.

With that mission in mind, the particular scope for this RLF award is three-fold:

Taking advantage of the SBA 504 program’s current record-low interest rates is Mr. Liquor in Rapid City, South Dakota. First District Development Company and Black Hills Federal Credit Union, Rapid City, paired up to offer Jason Dvorak an attractive commercial loan package for his latest business venture — the purchase and remodel of an existing building, and the purchase and installation of new furniture, fixtures, and equipment to open the doors to Mr. Liquor.

It’s as easy as 1 – 2 – 3…

1. A private lender typically finances 50% of the project cost and takes a first lien position on the assets financed. This lender provides a commercial loan at current market rates and fees for their share of the project. They also provide the construction or interim loan that is paid off from the proceeds of the SBA 504 loan.

With rates at historical lows, let your mind explode with options to utilize SBA 504 funds. First District Development Company offers SBA 504 financing for small businesses at fixed, low rates they can use for the following:

Are you working through crisis mode with your clients, who need to relieve the stress of continued expenses with irregular revenue? Consider FDDC’s small business refinance possibilities through the SBA 504 program while fixed rates are low. Two options offered for refinancing under the SBA 504 program include: (1) Refinance existing debt along with an expansion of the project property or (2) Refinance only existing debt with no expansion costs (this option allows for some cash out for eligible operating expenses).

Here are more details for each type of 504 refinance…

As a partner to South Dakota’s small businesses, First District Development Company invests in economic development activities other than lending. This year FDDC offered five – $1,000 scholarships to students pursuing a post-secondary degree in a business/finance related field. Student applicants were evaluated based on their academic achievements, character references, a written essay, and involvement in community, school, extra-curricular, volunteer, and special interest activities.

Congratulations to these award winners who are being recognized for their hard work and determination! FDDC wishes them continued success in their future careers.