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Is Now a Good Time to Buy Your Spa?

By: Barbara Morrison
Posted: September 29, 2011, from the October 2011 issue of Skin Inc. magazine.

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If you are leasing space for your spa, today’s low interest rates, and the many benefits of the SBA 504 loan program make this an opportune time to look into buying your facility. Small businesses that lived to endure the sizable lease cost increases during the past few years realize that property ownership may be less stressful and potentially more cost-effective than leasing. By purchasing your facility rather than leasing it, you may be better able to control its financial future, receive tax savings and enhance cash flow.

“We were previously renting our space with limited resources available. Looking to expand our spa and obtain some sort of financial security against rising rent costs, we enlisted a CDC to assist us with getting an SBA 504 loan,” explains Jacinta Gibbons, owner of San Francisco’s Cinta Aveda Institute. “Now, we are reaping the long-term benefits of owning our spa while implementing a business plan that would not have been possible without this major investment.”

The restrictions are that the loan proceeds can only be used to purchase, renovate or construct commercial real estate properties, or for the acquisition of equipment that has a life expectancy of 10 years or more.

Working with CDCs

To obtain an SBA 504 loan, small-business owners work with CDCs to process the paperwork. CDCs are private corporations that are certified and regulated by the SBA to make SBA 504 loans in specific geographic areas. Approximately 250 CDCs operate throughout the United States. The role of the CDC is to assist small businesses in obtaining 504 financing in partnership with a private lender. For more information on these types of loans, log on to www.sba.gov.

Barbara Morrison is the CEO and founder of TMC, a certified development company (CDC) based in San Francisco. TMC has provided approximately $6 billion in financing for more than 3,700 businesses throughout California and Nevada over the past 29 years.