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The Evergreen Edge Newsletter
Featured Loan
Somarakis, Inc. ready to pump prosperity into community
| Business Names / Operating Companies: | Somarakis, Inc. |
| Borrower/Eligible Passive Company: | John Somarakis Trust |
| Industry: | Pump and Pumping Equipment Manufacturing |
| Project Location: | 552 Hendrickson Drive, Kalama, WA 98625 |
| Financing Purpose: | Purchase of real estate, equipment and moving costs |
| Financing Structure: | 50%/40%/10% |
| Interim Lending Partner: | Umpqua Bank |
| Permanent Lending Partner: | Umpqua Bank |
| Economic Development Goals Met: | Assisting Manufacturing Firms and Businesses in Labor Surplus Areas |
| Jobs Created and Retained: | 30 over two years |
| Website: |
Patents are powerful tools of the innovation economy. More than two decades ago John Somarakis used a revolutionary vacuum pump patent to start Somarakis, Inc. and develop it into an internationally known manufacturer.
Somarakis, Inc. manufactures large vacuum pumps used in industrial applications such as mining, pulp and paper processing, and water treatment facilities. It offers a proprietary bearing and seal system that allows the pump to continue operating if the primary bearings fail. In addition to the product patents, the company can manufacture pumps of a larger size than its competitors.
Managing success is also a challenge. Demand began to exceed Somarakis's ability to supply the market. The company's production was limited by the size and layout of its facility. "As we grew bigger and bigger, the building grew smaller and smaller," said Somarakis.
Somarakis found a new property with sufficient space to more effectively lay out production lines, as well as increase volume and his bank recommended the SBA 504 loan to finance it.
The program could also help with the purchase of new equipment and the moving expenses to move his large equipment to the new location.
Somarakis said he chose the 504 program because of the low down and the low fixed rate. He wanted to minimize his payments and see how the business expanded. He had had good experiences with SBA loans years ago and, like many business people, he also sought the advice of his CPA and attorney. They approved of the 504 program and its benefits.
Evergreen Senior Loan Officer Lynn Beadling worked with Mr. Somaraki and Scott Price of Umpqua Bank on the financing package. Somaraki said, "Lynn Beadling did an excellent job. She is nice to work with and did more than I expected."
The loan package was closed using Evergreen's "simultaneous signing" process, whereby the SBA loan documents were sent to escrow to be signed along with the bank's. Umpqua Bank and Evergreen worked in tandem to meet all funding conditions prior to closing the bank's interim loan. As a result, very little post-closing follow-up was needed, shortening the SBA funding process by a month.
Now Somarakis Inc. has better efficiency and room to grow and offer repair services. The community will benefit from all the jobs that will be created. In the future Somarakis may buy more equipment with a second 504 loan.
To other small businesses, Somarakis recommends, "If Evergreen Business Capital approves your loan it will be a slam dunk with the SBA. It's a good thing, that's all there is to it."
Latest Loan Approvals and Funding
August approvals and September funding
Posted on Aug. 31 2009 10:07 am
We share some of our recent loan production details to recognize our lending partners, show the diverse businesses the 504 program can assist and celebrate the jobs being created.
August Approvals
| Lender | Business | Location | Project | Jobs |
| Alaska USA Federal Credit Union | Ceramic Tile Distribution | Achorage, AK | $1,013,611 | 8 |
| Bank of America | Cosmetology College | Bend, OR | $1,756,330 | 4 |
| Bank of the Pacific | Auto Repair | Burlington, WA | $1,484,190 | 9 |
| Numerica Credit Union | Construction Materials | Kennewick, WA | $418,650 | 6 |
| Pacific Continental Bank | Dental Practice | Portland, OR | $652,000 | 4 |
| Regents Bank | Optometry | Vancouver, WA | $1,513,460 | 0 |
| Security State Bank | Pediatric Physicians | Centralia, WA | $1,782,396 | 3 |
| Sonoma Bank | Fast Food Restaurant | Redmond, WA | $2,288,448 | 25 |
| Viking Community Bank | Property Management | Puyallup, WA | $1,165,900 | 4 |
| Washington Trust Bank | Auto Repair | Spokane, WA | $947,822 | 5 |
| West Coast Bank | Law Office | Salem, OR | $1,879,263 | 10 |
| Zions Bank | Home Repair Restoration | Bend, OR | $1,678,400 | 5 |
| Totals | $16,580,470 | 83 |
September Funding
| Lender | Business | Location | Project | Jobs |
| Bank of America | Crane Service | Poulsbo, WA | $1,420,562 | 3 |
| First National Bank Alaska | Chiropractor Office | Homer, AK | $645,000 | 1 |
| First National Bank Alaska | Childcare Provider | Anchorage, AK | $1,055,250 | 7 |
| Flow Financial Services | Stone Fabrication and Installation | Portland, OR | $193,755 | 2 |
| Fortune Bank | Dental Lab | Seattle, WA | $1,525,100 | 8 |
| Global Credit Union | Restaurant | Spokane, WA | $850,000 | 6 |
| Numerica Credit Union | Powersports | Moses Lake, WA | $1,669,333 | 9 |
| Pacific Continental Bank | Dentistry | Lacey, WA | $625,450 | 0 |
| Peoples Bank | Family Dentist | Bellingham, WA | $1,817,538 | 6 |
| Umpqua Bank | Pump and Pumping Equipment Manufacturing | Kalama, WA | $4,117,000 | 30 |
| United Commercial Bank | Manufacturing | Kent, WA | $5,296,000 | 22 |
| Totals | $19,214,988 | 94 |
The 504 Corner
The future of SBA 504 Loan Program fees
Posted on Sep. 10 2009 10:04 am
Financing can be complex. SBA 504 program fees will be a bit more complex for the next few months due to the start of a new fiscal year and the ending of the Recovery Act fee waiver. Evergreen Business Capital is here to make them simple.
The American Recovery and Reinvestment Act of 2009 waived the borrower Processing Fee of 1.5% of the net 504 loan amount and the lender Participation Fee of 0.5% of the first mortgage amount through the end of the calendar year or until funds run out. It is projected that they will last through December and end in January, 2010.
The federal government begins its new fiscal year on October 1, 2009. The on-going SBA Guarantee Fee will increase from zero to 0.389%. This fee is included in the interest rate we quote and is included in the monthly payment the borrower makes on the 504 loan. Thus, all 504 loans authorized on or after October 1, 2009 will pay a slightly higher fee resulting in a slightly higher interest rate than those approved prior to that date.
One reason for the increase is that the SBA uses the nation's unemployment rate in the econometric subsidy model. The nation's unemployment rate has risen and indications are that it will continue to increase. Another factor is the use of forecasted loan default data in the model's calculations, which the SBA also expects to increase.
The Certified Development Company industry has communicated to Congress that this fee increase is counter-productive to the nation's recovery efforts as part of our ongoing conversation on how to improve the program.
Looking ahead,
Through September:
- The borrower's one-time CDC Processing Fee of 1.5% of the net 504 loan amount is waived by the ARRA.
- The borrower's ongoing SBA Guarantee Fee is 0.0%.
- The lender's one-time Participation Fee of 0.5% of the first mortgage amount is waived by the ARRA.
October through December:
- The borrower's one-time CDC Processing Fee of 1.5% of the net 504 loan amount is waived by the ARRA.
- The borrower's ongoing SBA Guarantee Fee is 0.389% and included in the effective rate for loans authorized after October 1, 2009.
- The lender's one-time Participation Fee of 0.5% of the first mortgage amount is waived by the ARRA.
January, 2010 through the fiscal year:
- The borrower's one-time CDC Processing Fee of 1.5% of the net 504 loan amount will likely return.
- The borrower's ongoing SBA Guarantee Fee is 0.389%, which became effective on October 1, 2009.
- The lender's one-time Participation Fee of 0.5% of the first mortgage amount will likely return.
All these fees are set at the time of loan authorization by the SBA. Businesses with current Authorizations will not have their fees change. Refer to this month's Q & A: The Finer Points of the 504 article for a more detailed description of the program fees or trust your local Evergreen Loan Officer to explain the fees and rates on any particular loan that is approved or funded.
Q & A: The Finer Points of the 504
What are the SBA 504 Loan Program fees?
SBA 504 loans offer a low-down-payment, long-term, low-interest-rate solution for the purchase of commercial real estate and equipment, allowing business owners to keep cash available for other business needs. All 504 fees are set when SBA authorizes the loan. Businesses with Authorizations will not have their fees change.
BORROWER LOAN ORIGINATION FEES
The total Origination Fees are 2.15% of the net 504 loan amount. The "net 504 loan amount" is the portion of total project costs financed by Evergreen before our fees are added, usually 40% of the total project costs.
- SBA Guarantee Fee of 0.0% paid to an SBA account. (Yes, it is currently zero.)
- Funding Fee of 0.25% paid to Development Company Funding Corporation and charged to cover the costs incurred by the trustee, fiscal agent and transfer agent.
- CDC Processing Fee of 1.5% payable to Evergreen. This fee is currently waived by the Recovery Act and is expected to return in January, 2010.
- Underwriter's Fee of .4% paid to the program underwriter on Wall Street.
BORROWER SERVICING FEES
These fees are included in the interest rate we quote and thus part of the monthly payment the borrower makes on the loan.
- Servicing Fee to Evergreen of 0.625% per year of the loan amount.
- Central Servicing Agent Fee of 0.1% per year of the loan amount. The current Central Servicing Agent is a company called Colson Services.
- SBA Guarantee Fee, currently 0.0% per year of the loan amount. It will increase to 0.389% in the new fiscal year beginning October 1, 2009. This increase will only affect loans authorized after October 1.
LENDER FEE
The lender or bank pays a one-time Participation Fee of 0.5% of the first mortgage amount. Evergreen collects it and pays it to the SBA on behalf of the lender. This fee is currently waived by the Recovery Act and is expected to return in January, 2010.
Inside Evergreen
Evergreen Business Capital partners with AKSourceLink
Posted on Sep. 10 2009 11:53 am
Linking Alaska's small businesses to the right resource at the right time
AKSourceLink is a community referral network that links small and emerging business owners in Alaska to local resource partners who offer services that help small businesses grow and prosper.
The AKSourceLink network consists of nonprofit organizations, university programs and government agencies that provide resources to promote the success of small businesses in Alaska. Resource partners include economic development organizations, educators, technical assistance providers, state and federal programs, networking groups, loan providers and Evergreen Business Capital.
The role of AKSourceLink is to connect entrepreneurs and small business owners to the resources they need when they need them. They do not offer business counseling or educational services directly to the entrepreneur, but if you call their toll-free number, 888.554.6525, during regular business hours their trained Network Navigators will connect you to the appropriate service provider. Their referral services are free of charge.
The AKSourceLink website, http://www.aksourcelink.com/, also provides links to articles and information of interest to the entrepreneur and business owner, and maintains a statewide calendar of business-related events. You can also find a link to AKSourceLink on our Small Business Resources page.
In Other News
SBA launches new online training course: ‘How to Win Federal Contracts’
Posted on Sep. 9 2009 2:29 pm
Online course part of federal government-wide initiative
The U.S. Small Business Administration has launched a new online training course to help strengthen access to contracting opportunities for small businesses, including those owned by women, minorities, disadvantaged individuals and veterans.
The training course, "Recovery Act Opportunities: How to Win Federal Contracts," is part of a federal government-wide initiative announced last month by President Obama and being led by SBA and the Department of Commerce.
"Government contracts can play a key role in helping small businesses turn the corner in terms of expansion and job creation," SBA Administrator Karen G. Mills said. "But make no mistake, the benefits the government receives are equally as impressive - working with small businesses allows the federal government to work with some of the most innovative companies in America, often with direct contact with the CEO."
"The SBA online training course can help businesses access the federal purchasing system and position themselves to compete for the commercial opportunities offered by government contracting," Mills continued.
In announcing the government-wide initiative, President Obama reiterated his Administration's commitment to providing "our Nation's small businesses with maximum practicable opportunity to participate in federal government contracting." As part of the initiative, federal agency procurement officers are participating in more than 200 events over the next several weeks to help connect small businesses with contracting opportunities. Additionally, SBA and Commerce are expanding their outreach to contracting officials across the federal government to ensure they have the tools to meet their annual contracting goals and increase opportunities to small businesses, including those owned by veterans, women and minorities, as well as those in designated HUBZones.
As part of the outreach to small businesses, the comprehensive online course uses both audio and script to provide information about the federal marketplace, contract rules and, most importantly, how to sell to the government and where to find contract and Recovery Act opportunities. The new training portal is a free online training course designed to assist entrepreneurs during this period of economic recovery. This self-paced, instructional guide provides an overview of the federal procurement process.
The Recovery Act Opportunities course is available on SBA's Web site at www.sba.gov or directly at www.sba.gov/fedcontractingtraining. The course is indexed by subject matter to allow ease of use, and it includes multiple direct links to additional contracting resources.
The Recovery Act Opportunities course includes direct links that highlight the best contracting resources and engages small business owners in the contracting process. The course also includes practical and fundamental steps to engage business owners in the federal contracting arena.
It is one of more than 24 online tutorials offered by the SBA, and is available 24/7.
SBA launches YouTube channel
Posted on Sep. 9 2009 2:23 pm
Aim is to Reach Larger Audience through Popular Site
The U.S. Small Business Administration has begun posting informational videos on YouTube as it joins an increasing trend within the federal government to use the popular video-sharing web platform to reach a larger audience.
YouTube is a highly popular Web site, especially among younger people. SBA is intent on reaching this audience with its message of entrepreneurship, the importance of small business to the nation's economy, and information on the agency's programs and services.
"With millions of visitors, most of them under 35, YouTube offers a prime opportunity to use current technology and the appeal of a popular online platform to further promote the agency's programs and services," said SBA Administrator Karen G. Mills. "By expanding its outreach, SBA will be providing more current and potential entrepreneurs with the necessary tools to start, grow and succeed in their businesses."
The SBA YouTube channel (www.youtube.com/sba) debuted with a 60-second introduction to SBA, its programs and services, and a 10-part "Delivering Success" series co-produced with the U.S. Postal Service.
Future content will include a variety of videos with more in-depth information about SBA programs and services to inform current and potential entrepreneurs. Topics will cover how small businesses can take advantage of the Recovery Act loan programs, government contracting opportunities, exporting to increase market share, counseling and training on how to start and grow a small business, and small business success stories.