TMC Financing recently helped Cliff Maldonado, owner of BayStreet Research, secure real estate financing through the SBA 504 loan program. The funds were used to purchase a 2,399 square-foot building in Oakland, CA to replace its increasingly expensive leased space in San Francisco.
BayStreet Research (BSR) is a mobile analytics firm that provides timely research on the U.S smartphone, tablet and smartwatch markets. BSR collects and maintains a premier database of sell-through data and mobile device retail trends. Through this refined database, they provide their clients and partners with unique insights, reports, and competitive intelligence on the smartphone industry.
The majority of BSR’s clients are major Bay Area tech companies so it was imperative for BSR to stay local. With rental rates in San Francisco soaring, Cliff feared getting priced out of the area. He recognized that in order to hedge against rising San Francisco rental rates, he needed to buy a building to house his business.
“I had zero control over my occupancy costs,” explains Cliff. “My business operated out of leased space since 2005 and the rent continually increased. Initially, my rent was $4,000 a month. Within the last three years, my rent had escalated from $8,000 to $10,000. If I would have stayed in that same leased location the rent would have reached $14,000 a month. It was time to do something about this – it was time to buy.”
Cliff needed an accessible and affordable financing option that would allow him to acquire commercial property in a demanding real estate market. Fortunately, he discovered the SBA 504 Program.
When considering the purchase of the Oakland property, Cliff realized that the mortgage payment for the new facility would be approximately $5,000 less than their rent. Additionally, the tax benefits of owning more than compensated for the added cost of property taxes and insurance. Most importantly, by continuing to rent, they would be at the whim of a landlord and consistently rising rents. Owning the building gives the business the security of long-term stability in occupancy costs.
BayStreet Research is not only in complete control of occupancy costs, but they also have set themselves up for maximum productivity and future expansion. When asked how owning his building has changed day to day operations, Cliff told TMC that since he took ownership of his building, he has seen a positive change in his staff.
“Morale is high. Rather than the hustle and bustle of downtown San Francisco, we have created a calmer environment in our new Oakland home. We even have more room that’ll allow us to hire more employees down the road. Blood pressures are down, and performances are up.”
The 504 loan is administered by a Certified Development Company (CDC) such as TMC Financing. A CDC is a nonprofit organization built to support economic development within its community through the SBA’s 504 loan program. CDCs guide business owners through the entire loan process and act as the owner’s advocate throughout the life of the loan.
“I can’t speak highly enough about the TMC team. They were my advocates and I could trust them entirely. While I was running my business, TMC kept me calm. Their expertise was critical, and their advice was instrumental in helping me buy my building,” states Cliff.
More About SBA 504 Real Estate Financing
The Small Business Administration 504 loan program allows small-business owners to finance commercial real estate and other fixed assets with long-term, below-market, fixed interest rates. SBA 504 loans can be used to finance the total project cost, which can include the purchase price, construction/renovations, equipment, soft costs and closing costs. By enabling owners to keep their capital working to grow the business and create jobs, the 504 program provides businesses and communities long-term stability. Business owners can confirm they meet the qualifications for an SBA 504 loan by visiting the TMC Financing website.
Contact TMC Financing
TMC Financing is one of the nation’s top-ranking CDCs and a Premier Certified Lender with the SBA. If you are thinking about buying your own commercial property in California or Nevada, talk to one of our local 504 loan experts. Regardless of where you are in the process—TMC Financing can help guide you through the next steps and help you with the pre-qualification process.