Lakeshore 504 Expands Loans

October 17, 2005
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HOLLAND — After more than 20 years of partnering with the Holland and Grand Haven chambers of commerce, Lakeshore 504, a Small Business Administration program, has expanded to partner with other area organizations.

Julie Parker, program director for Lakeshore 504, said the program now is partnering with the Grand Rapids, Muskegon and Kalamazoo chambers as well as Cornerstone Alliance in southwestern Michigan and economic development organization Lakeshore Advantage in Zeeland. While it is still housed in the Holland and Grand Haven chambers, its services are available to all partners.

With the expanded awareness and networking, Lakeshore 504 has more than doubled the loan total from 2004 to 2005. In 2005, the organization so far has distributed about $8.5 million in a total of 18 loans to businesses, more than doubling the $3.6 million in 11 loans in 2004. In 2003 the organization hit a record amount of 25 loans and $11 million lent, a number that Parker said she hopes the organization will achieve again with its new contacts and partnerships.

Lakeshore 504, a nonprofit corporation, can help businesses get loans of up to 40 percent at a fixed rate for 20 years and a 10 percent down payment. The remaining 50 percent is borrowed from a bank partnering with the corporation. Financing for the program comes from the Small Business Administration.

Businesses can use the loan for purchasing land, constructing, remodeling or modernizing a building, purchasing machinery with at least 10 years of useful life, and soft costs such as environmental costs.

Lakeshore 504 is able to lend up to $1.5 million in general for its portion of the loan, $2 million if a public policy goal is met, and $4 million for manufacturing, Parker said. Businesses have to create or retain one full-time equivalent job for every $50,000 borrowed from Lakeshore 504’s funds. Their tangible net-worth must not exceed $7 million, and net-profits after taxes cannot exceed $2 million. Nonprofit businesses, real estate companies, financial institutions and passive income businesses are not eligible for the funds.

The 40 percent that Lakeshore 504 loans to the borrower is raised by the SBA through the bond market.

Businesses affiliated with the organization’s partners can apply for loans through Lakeshore 504. If the proposal is funded, the organizations receive a percentage of Lakeshore 504’s fee income.

“They’re giving another member benefit to their chamber members,” Parker said.

Randy Thelen, president of Lakeshore Advantage, said partnering with Lakeshore 504 has been a positive step for his organization.

“We’re looking to take advantage of every tool in the toolbox,” he said. “Lakeshore 504 is certainly a strong financial tool for small and medium businesses.”

Thelen said the staff at Lakeshore 504 is working with two of his clients to receive loans, which have not yet closed because the partnership is only a few months old.

“Julie and her team have been exceptional,” he said. “We know we have a partner at Lakeshore 504 that will provide the same level of service that we will provide.”

Cindy Larsen, Muskegon Area Chamber of Commerce president, said the chamber has several members that are in the process of getting loans from Lakeshore 504.

“We’re looking forward to closing them and adding more to them in the future,” she said.

Larsen said the Muskegon chamber helps to market Lakeshore 504 to its members to let them know the program is there.

“The program has been available to Muskegon businesses for quite some time, but I think we also know that there was a low level of awareness in our community,” she said. “It’s a great program and we want more Muskegon businesses to take advantage of it.”

Parker said that awareness is key to the growth of the program. She is now focusing on the target market of Muskegon south to the Michigan/Indiana border and over to Kalamazoo

Lakeshore 504 is different from other Certified Development Companies because it is the only one housed in a chamber, which benefits both the program and the chamber.

“We take all the money we make and invest it back,” she said. “It definitely helps with the bottom line. The vitality of the Holland chamber speaks to that.”

Parker said the next step for Lakeshore 504 is to attain Accredited Lender Program status with the Small Business Administration in order to streamline the application process. The new status would decrease time spent applying for the loan.

“That will dramatically cut down on paperwork,” Parker said.

Cost estimates and most recent rates are available at anytime, at no cost or obligation, said Ed Garner, business development manager. For more information on Lakeshore 504, call Parker at 392-9633 or Garner at 846-3153.    

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