Officials tout SBA loan program

Manufacturer Haberman Machine is example of success

Local manufacturing company Haberman Machine has been in business for 30 years, and it survived the last great recession thanks to a small business debt refinancing program called the CREED Act or the SBA 504 loan program.

The refinancing bill was introduced as part of the 2010 stimulus package before sunsetting Sept. 27, 2012. On the first day of the federal government shutdown, Haberman officials marked the company’s 30th anniversary by inviting representatives from loan associations such as SPEDCO, Twin Cities Metro CDC (TCM) and the National Association of Development companies (NADCO), as well as representatives from the Small Business Association, to talk about the SBA 504 program.

“(The program) assisted a lot of businesses to help refinance their debt at a low interest, and in the case of Haberman Machine, gave them the ability to turn around and hire employees, 28 of them in fact, two years after their refinance loan came through,” said SPEDCO representative Kristin Wood.

“This building is one of two facilities that we have. One about five miles west of here is another manufacturing plant. We have 80 employees. We work with military and defense contracts and we make firearm components. We’ve been through five different SBA programs and they have continued to allow us to expand and do our business here and allow us to double our workforce,” added Haberman Machine Controller Kimberly Arrigoni.

It’s also allowed Haberman to continue working in the community to fill the skills gap in manufacturing that has arisen over the past few years.

The latest push for renewal of the SBA 504 refinancing program has bipartisan support in the small business committee in Washington, D.C. During the program’s first run, thousands of loans were approved, with 2,700 loans nationwide approved in the program’s final year. Documents provided by the loan groups said the 504 program cost neutral with no impact on taxpayers since loan costs are funded by interest rates on a company’s owner.

Program interest rates are low, around 5 percent for a 20-year loan, and benefits small businesses by helping those in good standing (defined as making their mortgage payments for the past year) refinance badly structured debt.

The current bill being proposed, created by U.S. Sen. Mary Landrieu, D-La., and U.S. Rep. Judy Chu, D-Calif., is currently going through the committee with bipartisan support. What happens next is up to Congress. Estimates are that 250,000 businesses could possibly profit from the passage of the bill, which extends for five years a provision allowing small business owners to use SBA 504 loans to refinance certain existing commercial mortgages. The temporary length of time is due to people feeling that a five-year period would help businesses.

“I’m very glad to be here and though I’m from Washington, D.C., please don’t hold that against me,” said NADCO President and CEO Beth Solomon. “It’s a bit of irony to be here talking about a program like this at a critical point in our economy on the day that a major government shutdown is occurring. The two sides are bickering and can’t talk to each other. I don’t think they understand the impact this will have on small businesses. I appreciate the opportunity to be here to give you a firsthand look at what public-private partnerships can do for small businesses.”

Soloman said that about 400 businesses nationwide were turned down when the program sunsetted. She added that she has heard some banks have people still wanting to apply for the loan, which is why various organizations are pushing for a renewal. The loan would work with the banks putting up five percent of the loan and the SBA putting up 90 percent of the loan.

“We’re working to bring our message to our representatives in Congress to explain how something that seems far away and complicated should really be a no-brainer. Sometimes it doesn’t look like there is a brain working in Congress with the public-private sector, but this would give us a mechanism to create and sustain jobs for our friends and neighbors and get back to the jobs that America needs,” Solomon said.

Contact Avery Cropp at avery.cropp@ecm-inc.com

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