Michael Spears was a little concerned that his new Collision Authority auto body shop at 2902 E. Craig Road was accessible only to westbound traffic, but he figured the benefits of the location outweighed the downside.
There isn’t a lot of competition in the area around Interstate 15 and Craig Road, and the 1.56-acre parcel was larger than another piece of land he looked at on Craig.
That’s why he took out $3.6 million in SBA 504 financing to open Collision Authority’s sixth shop in the Las Vegas Valley since starting the business in 1991. He expects to receive his license within the next week and will hire about 18 employees at the 20,000-square-foot shop.
“It’s a good opportunity to grow and expand with (interest) rates so low and only 10 percent down,” said Spears, who started restoring cars as a teenager in Texas. “Most of the conventional banks want 20 percent to 25 percent. It helps us keep cash to invest in new properties.”
He purchased Findlay Automotive’s body shop on Fremont Street in October and recently closed escrow on a 5.3-acre parcel in the Centennial area of northwest Las Vegas.
Spears lined up financing through TMC Financing, the top SBA financing firm in Southern Nevada, with Chase Bank as the primary lender.
TMC approved $30.2 million in SBA 504 loan volume in 2012, compared with $18.4 million last year, Vice President Ann Santiago said. The average TMC loan this year was about $750,000, up from $600,000 last year.
“So the positive thing is volume is up, and project sizes are up, which are indications of a stronger economy and stabilization in real estate,” Santiago said.
Because Collision Authority’s body shop is at least 10 percent more energy efficient than a regular shop, Spears was able to qualify for an SBA 504 “green” loan, which opens him up to greater financing opportunities.
Collision Authority had reached the limit for SBA financing with three existing properties, including two refinances and a purchase.
SBA 504 loans, administered through the U.S. Small Business Administration, are seen as a powerful economic development program to help small businesses grow. They must be used to acquire real estate, purchase fixed assets or expand existing owner-occupied businesses. The $50 billion in SBA 504 loans has created more than 2 million jobs in 2012, according to the SBA.
Las Vegas-based audio production company 3G Productions got a $691,000 SBA 504 equipment loan from Nevada State Development Corp. to purchase more equipment, giving them the largest inventory of sound equipment on the West Coast.
The loan was through Mutual of Omaha Bank at 3.5 percent interest over 10 years.
“We are a growing business, and the loan allowed us to purchase a new series of Audiotechnik speakers with two DiGiCo digital mixing consoles so we can continue to support our clients with new, higher-end products and technology,” said Keith Conrad, controller for 3G Productions.
The company also took out SBA 504 equipment loans in 2008 and 2010.
Since it was founded in 2004, 3G Productions has done audio rental and production for some big names in the music industry, including Stevie Wonder, Vicente Fernandez, Bon Jovi and Snoop Dog.
The company sells audio systems for hotels, theaters and live venues, including the MGM Grand, Tropicana and Cosmopolitan hotels. 3G also handled audio production for the Electric Daisy Carnival at Las Vegas Motor Speedway.
Santiago said the clearest advantage of SBA 504 financing is the 10 percent down payment and below-market interest rate. The loan is a very competitive product, but the primary focus within the industry is creating and retaining jobs, she said.
Most U.S. small businesses are eligible. The main criteria include having a maximum tangible net worth of $15 million and two-year average net income of $5 million after taxes, Santiago said.
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SBA 504 loan volume approved by TMC in 2012
SBA 504 loan volume approved by TMC in 2011