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Declining real estate prices and rising interest rates have caused many businesses and not-for-profits to consider finally acquiring a “home of their own.” The opportunities abound in available buildings, condos, and coops. The key for most small businesses and not-for-profits is affordability- keeping the downpayment low and keeping the monthly payments low so working capital is maintained for operations. The good news is that there are numerous programs available to help lower the cost of financing-programs that provide low fixed rate loans, programs that provide interest rate subsidies and even programs that lower related costs such as utilities and real estate taxes. Following are some of the affordable financing methods available to help your small business or not –for-profit agency obtain that facility:
NYS Linked Deposit Interest Rate Subsidy: for non retail small businesses, you may be able to obtain a subsidy of 2% for 2 years on part or all of your bank financing for the project. Banks that accept government deposits can participate in this program. Companies located in NYS empire zones are eligible for an additional subsidy.
Keyspan Abatements: if your new facility uses or can use gas service, contact Keyspan regarding its numerous abatement and energy efficiency programs. There are several ways to qualify for major reductions: new gas service, coming in from outside Keyspan’s service area, using SBA 504 mortgage financing from LIDC.
LIPA Programs: if you are a manufacturer looking to locate into a new facility, talk to LIPA early on about
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their conservation programs, free energy audits, electric cost reductions due to major increase in electric load, relocation from outside LIPA’s territory, or use of a NYS manufacturing efficiency program which entitles you to a LIPA abatement.
Real Estate Taxes: if you are building a new building on vacant land or doing major renovations, or you qualify under not-for-profit rules, you may be entitled as of right to a tax reduction. An alternative might be use of an Industrial Development Agency’s straight lease back or bond program.
Low downpayment financing for small businesses: There are two major financing programs available to small businesses acquiring, renovating or constructing capital assets- SBA 504 through LI Development Corp. and NY JDA.
SBA 504/LIDC: for all small businesses-retail,service,wholesale,manufacturer; provides up to 40% of total project cost (acquisition, renovations or construction, machinery and soft costs) in second mortgage position behind a bank or other lender; 20 years; low fixed rate.Available for buildings, leasehold improvements, condos, coops, machinery, commercial vessels.
NYJDA: for wholesale and manufacturing companies; 40% of project cost (not including soft costs) in second mortgage position; loan term will match first mortgage lender’s term; fixed and variable rates available. Typically used for buildings and heavy duty equipment.
SBA 504 and JDA can be combined in the second mortgage position. |
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Low downpayment financing for small businesses and not-for-profits: The New Market Loan Fund provides up to 40% second mortgage financing to acquire capital assets. It is available for small businesses who cannot access the SBA 504 program and for nonprofits. Loans are for 25 years at low fixed rates. The New Market Fund is also available to refinance buildings when the entity wants to use equity to put into operations.
Façade improvement grants and loans: Some communities on Long Island provide façade improvement grants and low interest loans to help improve a commercial corridor. Taking advantage of these funds can significantly lower the cost of a capital improvement project. These funds are typically offered through a local community development agency.
So, if you are a small business or not-for-profit looking to acquire a building, condo or coop in this market, now is the time to take advantage of the availability of properties and reasonable rates. Look into one of the above listed affordable financing programs to help make your dream of “home ownership” come true for your business or nonprofit.
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