FDDC Blog

For all SBA 504 loans approved after October 1, 2020, the Ongoing Borrower Guarantee Fee has changed. This fee is added to the debenture rate each month and is included in the full term effective interest rate that is quoted for 504 loan rates.

Farmers and Merchants Bank—Branch of First National Bank in Huron, SD, and First District Development Company (FDDC) via the SBA 504 loan program joined forces to offer an attractive financing package to a newly formed entity to do business as MA’s Carwash. This new venture is owned by brothers who are Huron natives—Matt Rathjen and Adam Rathjen.

As the economics and leadership of our country are on the brink of change, so is the season. Both changes, make us at First District realize just how thankful we are for the steadiness of your commitment to small businesses and to FDDC. We truly appreciate all the conversations and applications that result in utilizing FDDC’s SBA 504 or Revolving Loan Fund programs.

Most small business expansion projects involve the creation of jobs; however, these business situations are still eligible for SBA 504 financing if they meet one of SBA’s economic development goals. Here’s a complete list of how a small business can qualify…

…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.