Department Contacts

Ark-Tex Council of Governments offers several loan programs designed to help in economic development projects.  The purpose of the projects is to create and retain jobs in the region.

We are creative in our approach to structuring SBA 504 loans and turnaround time is excellent in that we work closely with the borrower and the third party lender to expedite loan approval from the SBA.

 Benefits of SBA 504 Loans

Found that perfect building, but your banker says you need 30% down?  Can't afford 30%?  Plus pay for renovations and soft costs and still have enough working capital left over for the expansion?  Well, the Ark-Tex Regional Development Company can help you by making you a loan to buy that building through the SBA 504 loan program.  Only 10%* down by you.  All project costs are included - land, building, renovation and soft costs.  The loans are long term and provide a low fixed interest rate. The SBA 504 loan program can even finance the machinery you need to buy.

*Please Note: Equity of 15-20% is required for start-ups and businesses with irregular profitability, lack of historical debt serviceability, or for single purpose properties.

 Eligibility for SBA 504 Loans

The maximum SBA 504 loan is $1.5 million; however, it can be increased to $2.0 million when meeting a public policy goal.  The public policy goals are as follows:

What Funds May Be Used For:

Proceeds from 504 loans must be used for fixed asset projects such as purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment. 

The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

Terms, Interest Rates and Fees:, Interest Rates And Fees:

Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and 10-year U.S. Treasury issues.  Maturities of 10 and 20 years are available.  Fees total approximately three (3) percent of the debenture and may be financed with the loan.

Collateral:

Generally, the project assets being financed are used as collateral.  Personal guaranties of the principal owners are also required.

You determine the total project cost (hard and soft costs). A bank or other financial institution finances 50% of the cost and takes a first mortgage (lien) position on the assets financed. The ATRDC, through the SBA 504 Program, finances 40% of the project cost up to a cap and takes a second mortgage position. You can put in as little as 10% equity.

Note: the seller can provide the 50% permanent financing, but, under current regulations, the seller must be co-equal to or subordinate to the SBA 504 loan. The 50% can come from a variety of nonfederal sources such as banks, non-bank institutions, and government agencies.

Advantages of SBA 504 over Conventional Financing

Low Down Payment.  Just 10%.  Lets you preserve your cash for your working capital. Most banks will lend only 60-70% of the appraised value of the project, leaving you to sink in 30-40%, plus the cost of renovations, plus the soft costs.

Fixed Rate on the SBA 504 Portion.  You don't have to worry about the prime lending rate going up. You can plan because you know the amount of your mortgage payments for the next 20 years.

Long Term.  ATRDC 504 loans are for 10 or 20 years.  Because the DCD is in second lien position, the bank or other lender doing the 50% first lien loan is willing to lend at a longer term.  Longer terms make your monthly payments lower.

Low Interest Rate.  Even with all the fees and closing costs included in the rate, it is still a low rate for a subordinate mortgage loan, particularly for small business.  The blended rate as between the bank portion and the ATRDC's 504 portion makes the project affordable for you.      

For the banker wishing to participate as the 50% lender, you get CRA credits; you lend at a lower loan to value ratio; you keep a growing customer happy; and you have lower risk because the SBA 504 loan is in second position behind you.  The community gets the advantage of keeping or attracting a healthy, growing small business that will be creating jobs and doing other wonderful things in the community.

The East Texas Rural Access Program (ETRAP) has a revolving loan fund whose purpose is to increase access to primary health care in rural parts of East Texas.  This is a new program with funding from the Robert Wood Johnson Foundation and the U.S. Department of Agriculture.  The ETRAP RLF is managed by the North East Texas Economic Development District Inc.

The Northeast Texas Economic Developers Roundtable is an association of economic development practitioners from over twenty counties.  The mission of the Roundtable is to gain and to act upon the advantages of "pooled mutual interests" that support the development of Northeast Texas.  This site provides information about the region and cities within the region including available commercial and industrial properties.

The I-30 / I-49 Connection is a partnership of communities and economic development entities in Northwest Louisiana, Southwest Arkansas, and Northeast Texas working together to provide information and resources for economic development.  The I-30 / I-49 Connection will help businesses or site location experts with sites, building, workforce or other issues related to job creation and retention in the region.