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Updated 04/19/2011 10:34 AM

Money Matters: Program helps small businesses get loans

By: Tara Lynn Wagner

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Cesar Cedillo owns his own plumbing and heating company, and just recently he has had some big things coming down the pipeline.

His business recently expanded from a small storefront to a massive 17,000 square foot store and warehouse. However, since renting the space is like watching his money go down the drain, he wants to buy the building.

"I know what I need to do," Cedillo said. "I know what I will do with the money. We have a market plan and everything, but we need the funds."

That's why he attended a Small Business Administration forum on accessing capital. It was a standing-room-only event.

Cedillo estimates he needs about $5 million to $10 million. It's a big loan, but not an impossible one, thanks to the recent expansion of the SBA's 504 program which specifically deals with real estate.

"We have many cases, recent cases, in which you are leasing the property, but you make an analysis in terms of purchasing the property,” Jorge Silva-Puras with the U.S. Small Business Administration said. “Using 504, you end up paying less for mortgage than you were paying for your lease. So that is definitely a program for him to look into."

It's important to note that the SBA does not issue loans, but it does guarantee them, as much as 75 percent or more depending on the program.

"We're giving lenders and banks opportunities to make loans that they may not ordinarily make because of the federal government guarantee behind that loan," John Hale III with the Office of Capital Access said.

The government has an interest in helping small business owners because it creates jobs. Cedillo has added four new employees this year.

"Two out of three out of every new jobs is created by small businesses in the nation," Silva-Puras said. "So we need to support them with financing, with counseling, with contracting opportunities and we'll definitely get out of the recession fully."

To find out more about the Small Business Administration, visit sba.gov.

When you need information about all of your financial needs, YNN brings it to you with Money Matters, airing every Tuesday.