Clean Rooms International

U.S. Senator Debbie Stabenow, D- Michigan, came to Grand Rapids in August to tour Clean Rooms International and highlight the importance of partnerships between private lenders, SBA 504 local lenders like the Economic Development Foundation, and small businesses, in creating jobs.

 

EDF partnered with Chemical Bank's Vice President Bruce Fedewa in securing the SBA 504 Loan for Clean Rooms International.  This allowed Clean Rooms to buy a new building with a 10% down payment, mortgaging 50% through Chemical Bank and the other 40 % through a 20-year, low fixed-rate loan with EDF.

 

Clean Rooms International is a 29-year-old company that designs and builds clean-room systems - walls, floors, ceilings, air-handling equipment - for specialized customers in medical device, pharmaceutical, aerospace, and electronics industries. The company had run out of space at their current facility and had the opportunity to purchase and improve a new facility that would meet and exceed current needs.

 

According to Sandy Bloem, Executive Director of the Economic Development Foundation, "The SBA 504 program was created for just this type of situation. Clean Rooms International needed to expand and at the same time reduce overhead expenses and free up capital. It is a perfect fit and we are excited that Senator Stabenow visited to help shine the light on this great program. EDF is here to help small businesses with their financing needs to expand or refinance their existing debt."

September 30, 2011 is the end to another government fiscal year.  The current fees built into the effective interest rate are evaluated each year .  As a result of the increase in loan defaults/losses the SBA 504 program has sustained over the last year it is very likely that the on-going Borrower fee will increase (similar to last year).

 

Currently, the on-going fee is 0.749%.  For example, the 0.749% is included in the effective rate quoted each month (the 4.69% 20-year effective rate includes this on-going fee).  This fee will almost certainly increase to the maximum fee allowed of 0.9375% beginning October 1.  Practically speaking this would increase the September effective rate to 4.88%.  

 

If lenders have a 504 prospect please give EDF a call ASAP.  The on-going fee is based on the date of the SBA Authorization and NOT the funding date.  If the borrower obtains an Authorization in September they will receive the lower 0.749% on-going Borrower fee and not the increased fee.