Every year TMC staff and members of our Board of Directors enjoy visiting a selection of our San Francisco-based clients on a fun-filled trolley tour. Each year TMC assists hundreds of businesses with obtaining SBA real estate financing. The annual trolley tour provides an opportunity for our staff and board members to see first-hand the positive impact of SBA financing for these businesses.

This year we visited the following businesses which have recently purchased commercial real estate with SBA 504 financing provided by TMC:

AGS, Inc. – Architecture and Engineering

5 Freelon Street, San Francisco

The Sports Basement, Inc. – Retail Sporting Goods

1590 Bryant Street, San Francisco

Fine Line Construction – General Contracting

943 Howard Street, San Francisco

Prospect Restaurant

300 Spear Street, San Francisco

Here’s a peak of the places we went to:

We’d like to acknowledge the TMC Board of Directors for their dedication and support of TMC and the SBA 504 loan program:

David Kraechan, Westamerica Bank

Denise Conley, Conley Consulting Group

Donald T. Briggs, Jr., KPMG Peat Marwick LLP

Gail Goldman, U.S. Department of Housing & Urban Development

Jennifer Raike, Old Republic Title CO.

Ken Johnson, Jones, Clifford, Johnson & Johnson

Linda Lee, Paragon Asset Management

Mark Buell

Mike Waltz, All California Mortgage

Selma Taylor, CARAT

Susan Lowenberg, Lowenberg Corporation

TMC Finances $378,000 SBA 504 Real Estate Loan For Kids ‘N Dance

TMC, a leading Certified Development Company providing SBA real estate loans in California and Nevada, recently announced the closing of a $378,000 SBA loan for Kids ‘N Dance, an East Bay based children’s dance school. SBA financing was used to purchase a 3,250 square-foot building located at 3840 MacArthur Boulevard in Oakland, allowing owner Kris Mueller to open a second studio with retail space in the heart of Oakland’s Laurel District. The financing was facilitated by TMC and approved under SBA’s woman-owned public policy goal.

“Healthy businesses who want to move from renting to owning or expand into a larger space can take advantage of the current historically low SBA 504 interest rates and the large number of available properties,” explains Ms. Morrison, CEO and owner of TMC. “Additionally, since the 504 program offers up to 90% financing, borrowers are typically only required to make a 10% down payment.”

Kris Mueller’s Kids ‘N Dance was represented by David Henderson of Colliers International for the building purchase. TMC’s Lou Scarpa, a business development officer representing the East Bay, assisted in financing the loan for Kris.

Voted as a Bay Area Parent “Family Favorite Award Winner” 5 times in the last 8 years (including 2010), Kids ‘N Dance offers highly interactive classes that are structured to enhance each child’s own creative expression. Ms. Mueller says of the new Oakland studio she financed with an SBA 504 loan, “The front of the space is a dance retail shop selling leotards, tights, ballet and tap shoes, dance accessories, dance books and toys. The back space is one large studio with a wooden sprung floor and mirrors and a separate dressing room.”

TMC has been providing SBA financing to borrowers for over 28 years. Loan proceeds can be used to purchase, renovate or construct commercial real estate properties, or for the acquisition of equipment. TMC’s staff works directly with borrowers, first mortgage lenders, and real estate brokers to tailor financing packages that meet SBA program guidelines and the borrower’s credit capacity.

Opening Doors Policy

Government programs are increasingly giving businesses a way out of recession doldrums

BY JOHN G. EDWARDS

Mary Lou Soto and her sister, Cindy, worried about their personal safety when they worked after dark at the old warehouse. Then, despite the worst Southern Nevada recession since the 1930s, the owners of Artistic Touch secured financing through a Small Business Administration program to buy a new location in February. They purchased a 5,000-square-foot warehouse at 2543 E. Washburn Road in North Las Vegas for $443,000, and their engraving equipment now whines into the night.

MIKE STOTTS | LAS VEGAS BUSINESS PRESS Eagle Stores President Jeff Marshall, talks Memorial Day with Rita Murphy, a worker at the Trop Stop Gas & Car Wash at 4885 W. Tropicana Ave. Eagle Stores, which owns the Trop Stop, got a commercial real estate loan with help from TMC Development.

Artistic Touch is one among a growing number of local small businesses that are getting help from government programs. The federal, state and local governments are helping small-business owners get loans, learn better management techniques, obtain government contracts, expand into export markets and cut costs. “We’re getting slammed” with new applicants, said Ron Horn, director of the Procurement Outreach Program, a division of the Nevada Commission on Economic Development. “They don’t have people knocking on their doors anymore,” Horn said. As a result, Horn said more businesses are coming to his division and asking for guidance on how to bid for prime contracts or as subcontracts on government projects.

Want to buy commercial real estate to use for a business? Virtually the only loans available come with guarantees from the Small Business Administration, said Ann Santiago, vice president and regional loan officer for TMC Development. SBA 7 (a) loans are generally easier to get than conventional loans, because the government increased the guarantees for lenders and set aside fees for borrowers. “It’s a great product in bad times,” said former banker Mark Phillips of Phillips Loan Support Services, a consultant to Nevada Commerce Bank. John Scott, district director for the SBA in Nevada, figures the agency’s programs and federal stimulus law enhancements in the programs have softened the economic crash for small businesses in the Silver State. He can point to several examples of businesses that got a financial boost through the SBA, including the Soto sisters’ Artistic Touch.

CERTIFIED DEVELOPMENT COMPANIES HELP SECURE LOANS

Ann Santiago prides herself on helping small businesses get big loans in tough times, but even she is daunted in times like this. For example, she knew it would be a challenge to facilitate a commercial real estate loan for Jeff Marshall, president of Eagle Stores Inc. His company owns the Trop Stop Gas & Car Wash near the corner of Decatur Boulevard and Tropicana Avenue. He wanted to expand so that he would be on the corner of the two streets, not just near the corner. His business was running close to full capacity.

“Last year, the economy has been in the tank. Lenders have been very hesitant to provide any commercial lending whatsoever,” Marshall said. So he turned to Santiago, vice president and regional loan officer for TMC Development, a certified development company. CDCs are nonprofit organizations that package a bank loan and bond with the help of a partial government guarantee. TMC Development helps clients obtain long-term, fixed-rate loans to buy owner-occupied commercial real estate through the SBA 504 program. The SBA takes some of the risk, making lenders more willing to lend to small businesses, but that doesn’t mean it would be an easy deal to do.

A commercial loan for “a gas station in today’s world? Are you kidding?” Santiago asked. “We did it.” It helped that Marshall was a longtime customer of Bank of North Las Vegas, which participated in the deal, she said.

Because the loan was for an expansion, Eagle Stores was able to use $1.7 million of the $4.4 million loan to refinance an existing conventional commercial real estate loan. Under the federal stimulus act, the SBA waived fees, saving Eagle Stores $22,000.

The Trop Stop soon will be bigger and better than the standard convenience store. It already includes Carl’s Jr. hamburger shop. Marshall said: “We’re going to become a mini-truck stop.”

To read the complete article, please visit the Las Vegas Business Press website.

Nose Above Water

SBA data show Bay Area small-business real estate borrowers are faring better than their U.S. peers.

By David Herbert

“Thousands of Bay Area small businesses that have borrowed to buy real estate for their own use though a federal program have outperformed their nationwide peers during the recession. But proposed changes to Small Business Administration rules to make the program more flexible could go a long way toward relieving the stress of falling commercial property values, experts on the program say. Those declines in some cases are harming small companies that otherwise might survive.

“Companies apply to the U.S. Small Business Administration for up to 40 percent of the total they wish to borrow through the so-called 504 Loan program. The loans must be used to purchase fixed assets, usually land, buildings and equipment. The SBA caps its commitment at $2 million in most cases. The SBA participation entices banks to extend credit, too, because they can recoup their share of the loan before the government if the business defaults.

“The proposed modifications to the program can’t come soon enough, said Barbara Morrison, president of San Francisco’s TMC Development, the largest 504 lender in Northern California. Press coverage of the foreclosure crisis has focused on residential real estate, but small businesses also are grappling with declining commercial property values, Morrison said.

“Despite the numbers, which indicate distress among Bay Area small companies is considerably less than in the nation at large, stress among her borrowers is greater than at any time since she went into the business in 1981.

“In the past, we never had more than a handful of problem loans. Before they have always been able to sell the property and move to smaller, leased space,” she said. “After labor, occupancy is generally a business’ second biggest cost, and if you can’t reduce your occupancy costs, it can sink you,” she said. She can help borrowers modify the SBA portion of their loans, but not the bank piece.

“Nationally, the default rate on 504 loans (the SBA calls it the “purchase rate” because they are buying the bad loans) has increased substantially since 2007. Default rates have gone from 6.69 percent on loans issued from 2001 through 2004 to nearly 17 percent on loans issued from 2005 through 2008, the most recent period available, according to the SBA.

“Most borrowers who are going to default do so in the first two to four years. That means the 6.69 percent default rate probably won’t continue to rise much but the 17 percent rate likely will.

“The SBA issued more than 21,000 504 loans in the four years from 2001 through 2004; it issued about 31,000 such loans in the four years from 2005 through 2008.

“At the same time, the default rate on loans issued from 2001 through 2004 in San Jose is 7.7 percent. “On loans issued from 2005 through 2008, the default rate is 9 percent. In San Francisco, default rates are running at less than 5 percent on 504 loans issued in the later period, up from less than 4 percent from 2001 through 2004.

“The proposed amendments would increase the limit on the SBA loan participation to $5 million and allow small businesses to re-finance existing conventional debt using the SBA program. “When a business loses its home, generally that means everyone who works for that business is out of a job, and the ripple effects on the economy are significant,” Morrison said.

“Morrison’s company has originated and continues to service 1,600 outstanding 504 loans in California and Nevada with an aggregate value of more than $1 billion. One of its recent transactions with the Bank of America involved the purchase of a $10.5 million San Leandro building by a company that installs modular office furniture. The borrower got $4 million from the SBA 504 program because it could show its energy consumption would fall by at least 10 percent in the new property. The same SBA increase is available when there is a renewable energy source such as solar equipment added to the project financing.

“It is harder to use SBA loans to gauge market health on the Peninsula and in the East Bay. The SBA issues relatively few 504 loans in smaller cities, and the sample size is too small to draw many conclusions about the health of local markets. The SBA backed 11 loans in Vallejo from 2001 to 2004, with not a single default. The agency issued 10 loans from 2005 to 2008, again with a zero percent default rate.

“Yet few would argue that those rates reflect a strong real estate market or economy in Vallejo, where the city is struggling through bankruptcy, and housing prices have tumbled from a $436,000 median on Feb. 1, 2007 to $164,000 on Jan. 1, 2010, according to Zillow. In fact, you could argue that the small and decreasing number of loans in some cities reflects a poor economy. Redwood City businesses scored 29 loans from 2001 to 2004, but just 17 from 2005 to 2008, for instance.

“Despite the high concentration of technology companies in the Bay Area, they are not the typical 504 borrower. Instead, the borrowers tend to be contractors, medical and dental service providers, retailers, hotels and restaurants.

“Even if the SBA allows entrepreneurs to refinance their underwater mortgages through the 504 program, it will not be a panacea. Ed Radzikowski has run a machine shop out of a 1,800-square-foot garage in his San Jose backyard for more than 20 years. He took out a second mortgage to buy new equipment in 2000, but the latest recession has slowed business to a crawl.

“He is now two years behind on his $810-a-month mortgage payment, and he needs to drum up $28,000 or Bank of America will foreclose on his home and business. “To me, it seems like we’ve been in a recession since 2001,” Radzikowski said. “I don’t care what the economists say.”

“Ken Mannina, a senior vice president at Bridge Bank in San Jose who focuses on SBA lending, is not surprised that Bay Area delinquency rates on 504 loans are better than the nation at large. Still, he says better is a relative term. “I’ve seen what’s happening in other markets, and it’s so much worse elsewhere,” he said.

“The higher SBA loan limits and the new refinancing capability would go some way toward filling the gap that has been left by conventional lenders’ pullback from the market, he said. If the changes are made, he said, “I think the demand is there, and the loan volumes will materialize.” ”

For more information on this article, please visit The Registry web-site.

American Royal International, Inc. – San Carlos

Bay Area Kenworth (trucking) – Sacramento

Bay Porter Express – South San Francisco

Black Tie Taxi, LLC – American Canyon

East Bay Connection, Inc. (airport shuttle service) – Concord

J & B Towing – Oakland

Lima Towing – Santa Clara

Korex Transport – Los Angeles

Lucero Trucking – Stockton

Luxor Cabs – San Francisco

MDM Tollford, Inc. (limousine service) – San Francisco

National Towing & Transport – Mountain View

Safetrans – San Jose

Sausalito Moving & Storage – Rohnert Park

Shamrock Moving & Storage – San Francisco

Sooner Distribution Services – Moorpark

Wraich Transport – Fontana

Veterinary & Pet Services

American Animal Hospital – Fremont

Animal Allergy & Dermatology Specialists – Las Vegas, NV

El Camino Animal Hospital – Palo Alto

Redwood Veterinary Hospital – Vallejo

San Carlos Pet Hospital – San Carlos

Serra Veterinary Hospital – Sunnyvale

Silverado Veterinary Hospital – Napa

Special Veterinary Surgery – Mill Valley

Tappen Hill Dog Boarding – Sebastopol

Veterinary Surgical Associates – Campbell

American Probe & Technologies, Inc. – San Jose

Bay Technology – Livermore

Betatron, Inc. – San Jose

Blackbag Technologies, Inc. – San Jose

Biosearch Technologies, Inc. – Novato

Bradford Technologies, Inc. – San Jose

Coastland Civil Engineering, Inc. – Santa Rosa

Comtel Systems Technology, Inc. – Sunnyvale

DocuStream, Inc. – San Leandro

Elim Biopharmaceuticals, Inc. – Hayward

Guardian Computer Support, Inc. – Livermore

Helio Solutions, Inc. – Santa Clara

HT Precision Corporation – San Jose

Hurricane Electric (internet service provider) – Fremont

Kelytech Corporation – San Leandro

Myntahi Corporation – Fremont

Nick’s Machining – Santa Clara

Primitive Logic, Inc. – San Francisco

Quality Assurance Engineering – Oakland

Saitech, Inc. – Fremont

Siegeworks, LLC – Livermore

Sierra Tech Research, Inc. – San Jose

Sky + Ltd. Engineering Technologies – American Canyon

Tech Soft America, LLC – Berkeley

Twinsoft, Inc. – San Jose

Versatronics – Campbell

Abbey Carpets – San Francisco

Asia Mart – Santa Rosa

Bamboo Reef Enterprises, Inc. (diving centers) – San Francisco

Bellach’s Leather for Living – San Francisco

Berkeley Bowl Produce – Berkeley

Browns Valley Cleaners – Vacaville

Campus Liquor, Wine & Food – Sacramento

Captain Aqua’s Full Service Dive Center – Hayward

Castaneda’s Marketplace – Windsor

City Carpets – Cotati

City Lights Books – San Francisco

Clay of the Land Pottery – Berkeley

Cottage Industry – San Francisco

County Square  Market – Antioch

Danny Thomas Party Rentals, LLC – Sunnyvale

Dixon Hardware – Dixon

Downtown Cellular – Los Angeles

Ethan Allen Home Interiors – Fairfield

Farinelli Fine Antiques – San Francisco

Fit-Tech Service Inc. – Fairfield

Habite – San Francisco

Ifshin Violins – Berkeley

Jessup Cellars – Napa

Lexann Pharmacy – San Jose

Lola’s Market – Santa Rosa

Memphisto (shoes) – Walnut Creek

Music Lovers, Inc. – San Francisco

Midnight Sun – Healdsburg

National Furniture Liquidators, Inc. – San Lorenzo

Rincon Latino, Inc. (grocery) – Richmond

Simayof, Inc. (jeweler) – San Francisco

Styler’s Floor Covering, Inc. – Lost Altos

Ted Levine Drum Co. – South El Monte

The Sports Basement, Inc. – San Francisco

Urban Ore, Inc. – Berkeley

Victoria Jewelry & Gifts – Hayward

Wheelchairs of Berkeley – Berkeley

Wilderness Trail Bikes – Mill Valley

Zuma Jay’s – Malibu

A Black Tie Affair (catering) – South San Francisco

Andy’s Bar-B-Que - Santa Clara

Arby’s Roast Beef – Vacaville

Back Forty Texas BBQ – Pleasant Hill

Bakery Express Cafe – Palmdale

Barbara Llewellyn Catering & Event Planning – Oakland

Basil Thai Restaurant – San Francisco

By the Bay Baking – Oakland

Caffe Roma Roasting Company – San Francisco

Children’s Choice – San Jose

Classical Catering – San Jose

Coffee Klatch – Upland

Continental Caterers – Palo Alto

Dragon City, Inc. – South San Francisco

Elixir – San Francisco

Fina Estampa – San Francisco

Firehouse Grill and Brewery – East Palo Alto

Golden Pacific Brewing Company – Berkeley

Hockey Haven – San Francisco

House of Prime Rib – San Francisco

Jessie et Laurent (home delivery) – San Rafael

Korea Garden – Las Vegas, NV

Manressa Restaurant – Los Gatos

Marin Cheese Company – San Rafael

Nagano Sushi Restaurant - San Francisco

O’Reilly’s Holy Grail – San Franciso

Original Joe’s – San Francisco

Original Mel’s – San Francisco

Orson – San Francisco

Paragon Restaurant & Bar – San Francisco

Pasta Sonoma – Rohnert Park

Popeye’s Chicken – San Pablo

Sandbox Bakery – San Francisco

Savoy Catering – Oakland

Shalizaar Restaurant – Belmont

Slanted Door – San Francisco

Sonoma French Bakery – Vallejo

Swiss Louis Restaurant, Inc. – San Francisco

Thai Issan Restaurant - Sebastopool

The Cheese Steak Shop – Hercules

The Spinnaker Restaurant – Sausalito

Vesuvio’s – San Francisco

Voila! juices – Oakland

Zuni Cafe – San Francisco

Balch Enterprises – Hayward

Castle View Realty – San Jose

C.C. Lending – San Mateo

Century 21 Mancheno Realty – Richmond

Cornerstone Real Estate and Homes Loans – Napa

Dwyer & Associates – San Francisco

Fidelity Brokers – Newark

Five-Star Mortgage, Inc. – San Jose

Hilltop Financial Mortgage – Sacramento

Home Investment Realty & Mortgage – San Jose

I Realty – Henderson, NV

Interstate Investment Brokers – Fresno

Mauri Financial Services Corp. – Brentwood

Meacham/Oppenheimer, Inc. - Campbell

Platinum Mortgage Lending Corp. – San Jose

Success One Financial – Fairfield

The Houghton Financial Group – San Jose

The Loan Experts – Saratoga

Thompson Brooks, Inc. – San Francisco

Thompson | Dorfman Partners, LLC – Mill Valley

U.S. First American Mortgage Banker Corp. – West Covina

Unifi Group, Inc. – Alameda

Welcome Home Staging & Design, LLC – Dublin

Berkeley Springs Manor – Berkeley

Canyon House Rest Homes – Menlo Park

Eden Villa – Walnut Creek

Green Acres Retirement – Sonoma

HMC Health Care, Inc. – Sunnyvale

McGarr House – San Anselmo

Mirabel Lodge – Forrestville

Nursing Care Providers – Hayward

Palm Villas – Redwood City

Rose Garden Court – San Jose

Sierra Home Healthcare Services – Los Angeles

Sutro Heights Residential Care – San Francisco

Watsonville Residential Care – Watsonville

West-Com Nurse Call Systems, Inc. – Fairfield

Print & Graphic Design Services

All American Label – Dublin

BrandVia Alliance, Inc. – San Jose

EBCO Print & Promotions, Inc. – Pleasanton

Elastic Creative – San Francisco

GraphiXStitch – San Jose

GT Design & Graphics – Simi Valley

Infolmage of California, Inc. – Menlo Park

Involution Studios, LLC - Sunnyvale

On Demand Printing Center – Los Angeles

Nomad Printing Services – San Francisco

Vision Isle – San Leandro

Zaudhaus (website design) – San Francisco