Financing an Arcade Expansion with a 504 Loan

Posted on | by Barbara Morrison

If you are an arcade owner looking to expand your business,  your primary goal is to add more games or other forms of entertainment. Theaters, bars, and private rooms are just some of the ways you could enhance the arcade experience and attract larger crowds. Of course, this will require more space. Whether you are thinking of making renovations to the building you already own, moving to a new location, finding a way to gain space while remaining within your budget is key.

If you have had trouble finding adequate financing for your arcade expansion in the past, you’re in luck. Much like finding the hidden secret to get to the next level in an arcade game, financing an arcade expansion with a 504 loan might just be the answer you have been searching for,  and a Certified Development Company (CDC) like TMC Financing might be the right partner.

How The 504 Loan Financed A $13 Million Arcade Expansion

As an arcade owner, you have your own unique financing needs, which is why the arcade industry is not typically targeted by banks or nontraditional lenders. If they do offer loans, the terms might be less than ideal and include balloon payments and high interest rates.  More often than not, arcade owners and investors are forced to seek out other options outside of traditional banks and brokers.

The Small Business Administration (SBA) 504 loan offers an easy prequalification process and ample funds for financing your arcade expansion. Because they are open to funding  single-use facilities, you won’t be penalized for the type of business you own. A 504 loan can be used to:

  • purchase land or buildings
  • construct, improve or upgrade buildings
  • purchase equipment with a service life of ten years or more
  • refinance conventional debt

For example, the Ten Pin Fun Center in Turlock, CA recently received a 504 SBA loan to finance construction and land acquisition. The total project cost is over $13,000,000 and is estimated to create over 70 new jobs once it is finished. The entertainment center will be complete with a bowling alley, game center, bar, and restaurant. After several attempts with traditional bank lending to no avail, they were able to utilize a 504 loan to get the proper financing they wanted and needed. If the headache of trying to find financing for your arcade expansion is all too familiar, then a 504 loan might be a good fit for you as well.

How Do I Apply For A 504 Loan To Expand My Arcade?

The 504 loan provides affordable financing for arcade expansions and encourages lending by conventional lenders (banks and credit unions) by providing them with low-risk conditions. The 504 loan program partners with a Certified Development Company (CDC) like TMC Financing with a conventional lender to provide a loan in three parts:

  • The first is a  loan from a conventional lender—a bank or a credit union—for 50% of the total project cost. The amount and conditions of that loan are determined separately, and it becomes the first mortgage. TMC can help match the arcade owner (the borrower) with the perfect banking partner for this loan, if requested.
  • The CDC facilitates a separate SBA loan of 35% of the total at a fixed, below-market rate. Also, projects eligible for the SBA’s Green Energy Program can receive up to $5.5 million. (You might want to consider “going green” for your arcade expansion) This is the second mortgage.
  • You, as the borrower will contribute 15% to the loan as down payment.

The 504 loan has a 10-, 20-, or 25-year term, and is fully amortized (so there are no balloon payments).  

A 504 loan can provide opportunity for arcade owners to access affordable and flexible financing to expand their arcade business. In turn, you are able to provide even more fun to even more people, which is a win-win scenario for everyone.

You can find out more about 504 loan financing and the Green Energy Program from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for your arcade expansion and guide you through the 504 loan process. Contact TMC Financing today.

 

Barbara Morrison
Barbara Morrison
Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison
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