Capital Gain

Thomas Wallace is helping businesses here and in other states benefit from a special loan program offered by the U.S. Small Business Administration to purchase land and machinery, construct facilities and fund other capital needs.

As a "certified development company," his North Fort Myers-based organization, Independent Development Services Corp., works with the SBA and private lenders to administer the financing for the 504 loan program.

Through it, a private lender covers up to 50 percent of the project cost, and the borrower contributes as a little as 10 percent. The remaining 40 percent comes from a second-position, long-term, fixed-rate loan with a low down payment. That piece is funded by IDS and backed by an SBA-guaranteed debenture. Debentures range from $50,000 to $4 million.

In six years, IDS’s portfolio has grown from barely $2 million to about $52 million in Florida and $6 million in Georgia, Tennessee, North Carolina, Maryland and Texas. It plans to award another $25 million to $30 million in loans soon.

Wallace, president of IDS, discussed the environment for 504 loans.

How does the 504 loan help the region’s economic picture?

It is an extremely efficient way of promoting economic development. It’s not subsidized by the federal government directly. Fees pay for credit losses and basic operation of the program. It’s very cost-effective.

What type of businesses can benefit?

This should be a growing business, an expanding business that has capital needs. Manufacturing [which represents 18 percent of the portfolio, behind the healthcare sector with 20 percent] is the textbook example of this because it’s capital-intensive, and the concept of having to put less money down is always attractive to these folks.

What percentage of applications is approved?