BLP Assists Acme Construction Metals in moving to Racine, WI


Business Acme Construction Metals Inc.
Lending partner FNB Fox Valley
Owner Jeffery Nelson
Location City of Racine
Project Building Purchase and Renovation; Equipment Purchase
Jobs creating
Financing source
City of Racine Revolving Loan Fund (City RLF)

Racine Development Group Revolving Loan Fund (RDG RLF)

 

 

 

 

 

 

 

 

Acme Construction Metals is a structural and ornamental metal fabricating company that provide structural steel and ornamental metals as well as erecting for general contractors.  The company has successfully delivered projects including theming structures for Six Flags XFlight roller coaster, the Fischel Park band shell, custom railing, and architectural support projects.  The business is owned by Jeffery Nelson and originated in Kenosha. Nelson, who has 35 years of experience in the trade, started the business in 2004.

The company was operating in Kenosha on a month to month lease; however due to the needs for a larger space to accommodate the growing business. Nelson’s desire to own his building, and the risk that a short notice to vacate may negatively impact Acme, Nelson decided to look for a new permanent location for his business.  The asset that Mr. Nelson acquired is 1800 Clark Street in the City of Racine.  The property is a 102,500 square feet multi-tenant facility and is currently occupied by six small businesses. 

As our company has continued to grow, our space needs were greater than our current location could accommodate so we began to look for a larger facility.  The 1800 Clark Street property is perfect for our needs, and it will provide us ample space to grow,” noted Jeff Nelson.  “There is no way we could have accomplished this purchase without the help of Racine’s Mayor John Dickert and RCEDC Staff.

Business Lending Partners (BLP) is the finance division of RCEDC that assisted Jeff in obtaining the financing he needed to make his building purchase and renovation a success. Utilizing the City of Racine Revolving Loan Fund (City RLF) and Racine Development Group Revolving Loan Fund (RDG RLF) loans provided Jeff with low-interest rates and allowed the company to contribute only 10% down payment toward the total project cost.  

Jeff Nelson and the Acme staff are true innovators consistently delivering high-quality artistry and excellent customer service. “Racine is fortunate to be home to many different sized companies, similar to that of Wisconsin” commented Mayor John Dickert. “Racine has a preponderance of first stage companies, those with 2-9 employees, just like Acme Construction Metals.  The partnership that the City has with RCEDC facilitated this success, we welcome this company to Racine and look forward to more projects like this in the future

 

SBA 504

February 2018

20-Year Fixed Rate:

4.940%

10-Year Fixed Rate:

4.657%

 

 

  Borrower Benefits
  • Lower Down Payments Required
    The borrower may provide a cash down payment as low as 10% of the total funding needs, allowing them to save their cash for other business needs.

     
  • Fixed Rates on SBA 504 Loan
    The borrowers do not have the risk of an increase in the interest rate on the SBA loan making long-term planning for the business easier because borrowers know the amount of their mortgage payments for the next 20 years.
     
  • Long Term
    SBA 504 loans are made for 10 or 20 year terms. Longer terms results in lower monthly payments for the borrower without the concern of balloon payments due prior to the loan maturity.

     
  • Low Interest Rates
    The long-term, competitive interest rate results in savings over the life of the loan.

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 Eligible Use of Funds

  • Land Purchases
  • Site Improvements
  • Existing building purchases, expansions or renovations
  • New construction
  • Equipment purchase and installation
  • Projected related costs such as furniture and fixtures, title insurance fees, legal fees, appraisals, environmental reports, architects fees, survey costs, points on bridge loans, etc.
  • Refinancing – Limited debt refinancing is permitted but must involve a business expansion where the refinance may not exceed 50% of the project costs (other restrictions apply).
 
Ineligible Use of Funds
  • Working Capital
  • Inventory
  • Vehicles licensed to be on the roads (trucks, cars)
  • Stock purchases

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Eligible Businesses
  • Must be a for-profit business
     
  • Size Standard:
    The business must be small as defined by SBA as those businesses with a net worth below $15 million and an average net profit (after taxes) for the last two years of below $5 million.  If these standards are exceeded, the business can still qualify for the program by meeting other SBA size standards based on either number of employees or annual revenue, depending upon the industry.
     
  • Citizenship Requirement: 
    The business owner(s) must be U.S. Citizen(s) or resident alien(s) with permanent resident status.

     
  • Occupancy Requirement: 
    For funding projects that include real estate, the business must intend to occupy at least 51% of the 'Rentable Property' for existing structures or at least 60% of the 'Rentable Property' initially (and 80% over time) for new construction projects.  "Rentable Property" is the total square footage of all buildings or facilities used for business operations, which may include exterior space (except parking areas) that is actively used in Borrower's business operations.
     
  • Job Requirements and Waivers:
    The small business must meet the job creation/retention requirement or qualify for a waiver. The general requirement is one job per $65,000 in SBA funding for typical 504 loans, or one job per $100,000 for small manufacturers.  If a business does not meet the job creation/retention goals of the SBA, they may qualify for the program under one of the other goals of the program found here.
 
Ineligible Businesses
  • Non-profit businesses
  • Lending institutions
  • Insurance institutions
  • Gambling organizations
  • Businesses of a prurient nature
  • Businesses of restricted nature that exclude based on race, sex, or creed
  • Speculative businesses/development
  • Businesses located in a foreign country

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 SBA Loan Fees and Pre-Payment Information

  • Approximately 3.2% administrative fees are financed in the SBA loan amount.
  • $2,500 for legal fees for the loan closing are financed in loan amount.
  • Participating bank is charged a 0.5% senior lien holder fee.
  • Out-of-pocket costs are charged directly to the customer, i.e. title insurance for closing, lien searches, recording the mortgage, etc.

‚ÄčThe majority of the fees are collected at the time of loan funding and financed in the SBA 504 loan amount.  A $2,500 fee is collected at the time of loan approval and applied towards closing costs.  Ongoing servicing fees are reflected in the 'blended interest rates'.

Discounts offered to Veterans!  BLP offers the following discounts on SBA 504 loans to businesses at least 51% owned by military veterans:

Loans less than $1.5MM:  0.5% of processing fee is waived (up to $7,500 savings)

Loans more than $1.5MM:  0.25% of processing fee is waived (up to $12,500 savings)

 

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SBA 504 Pre-Payment Information

During the first half of the SBA 504 loan term, a prepayment penalty exists.  Therefore, it is recommended that if the business wants to pay down some of its long term debt, that they prepay the bank portion of the financing package. The SBA loan cannot be partially prepaid.  The prepayment penalty declines every six months based upon the remaining principal balance of the loan and disappears altogether a 20-year loan reaches 10 years and a 10-year SBA loan reaches five years.

Guidelines regarding prepaying SBA 504 loans are as follows:

  • Company needs to notify BLP, in writing, at minimum 45 days prior to the date they would like to prepay their SBA 504 loan.
     
  • An SBA loan can be prepaid any month, however, it is recommended that if the borrower wishes to prepay their loan it is done on a six month interval to save on interest payments.
     
  • Prepayment penalties may apply. Prepayment penalty levels decline at six (6) month intervals and are eliminated once half of the term has passed.
     
  • The prepayment penalty is an amount equal to the outstanding principal balance plus accrued interest and the prepayment penalty.
     
  • Generally, the prepayment penalty equals 100% of the interest lost in the first year of the loan, 90% of lost interest in the second year, 80% the third year, etc.  After the tenth year, this becomes 0%.
     
  • Upon the funding of an SBA loan, the customer is provided a prepayment schedule which provides the dollar amount of the penalty for prepayments every sixth month until the penalty no longer applies.

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