LACEY, Wash.—Courtesy Auto Service & Tire Inc. owner Rick Parnell had a dilemma. During the past five years, his business had grown so much he needed a larger outlet. Unfortunately, it hadn't grown quite enough to offer him the cash flow or borrowing clout to finance a major expansion.
Like many businessmen, Mr. Parnell turned to his bank for options. What he got was akin to a dream come true.
Through his bank, Centennial Bank of Olympia, and the Evergreen Community Development Association, Mr. Parnell qualified for a Small Business Administration (SBA) 504 loan that allowed him to build a million-dollar facility for less than $10,000 down.
The $990,000 project will comprise a 9,000-sq.-ft., 12-bay auto service center about three blocks from Courtesy Auto's current location, explained Mr. Parnell, who began changing tires 22 years ago while in high school.
He went on to manage an outlet for Goodyear before becoming a regional manager. After 11 moves in 16 years, he and his family decided it was time to settle down. In 1991, he bought a Goodyear dealership in Lacey.
Unsure of whether he'd have the skills or the will to make a go of it as an owner, Mr. Parnell leased his current facility. But stressing the company's motto, ``We make an unpleasant experience pleasurable,'' he has been a success.
The new outlet will be twice the size of the facility he leases now, and will have triple the amount of parking space.
Mr. Parnell said he expects to move into the new building in February. By that time, the staff will increase to 10 employees from its current eight.
Had it not been for the SBA loan, Mr. Parnell's small operation might not have been able to grow.
``I guess if I was forced into a corner, I might have been able'' to finance the expansion without the SBA loan, he said. ``I could have stressed out and had a heart attack before it was over.''
SBA 504 loans are offered to small, but successful, businesses that have no other means to expand, according to James McDonald, executive director of the Evergreen Community Development Association in Seattle.
``It's not for businesses that are on the ropes; it's for successful business,'' he explained—businesses that can help a local economy expand and offer jobs.
The 504 program offers support of up to 40 percent of total project costs for new construction and the addition of fixed assets. Terms include a minimum 10 percent down payment from the borrower, vs. the 30-40 percent usually required for a commercial loan, the development association said.
Financing is based on lower-than-current market rates with a payback term of up to 20 years. Up-front costs are lower and terms of repayment are extended, compared with a traditional commercial loan.
Nationwide, the program will create nearly 150,000 jobs in 1996, according to the Evergreen Community Development Association.
Messrs. Parnell and McDonald both encouraged dealers looking to expand to examine the possibilities of SBA 504 loans by checking with their local bankers or with the Arlington, Va.-based National Association of Development Companies: (703) 812-9000.