For Dr. Ronald Burgos, not only is the new building at 3071 Michigan Ave. in Kissimmee the best medicine for his growing practice’s space needs, it fulfills a 12-year-old dream.

Back then, the 54-year-old family physician had looked at the then-vacant property as a possible office site, but abandoned the idea in large part because he determined the price would be too high.

In the intervening years, he maintained his desire to own even as he rented space – until he recently stumbled upon the property again.  One thing led to another, and in March Burgos moved into his new 5,000-square-foot office with the help of the Small Business Administration 504 Loan Program, which makes it affordable for small businesses to own property.

“Our first motivation was that it’s an investment type of move – we wanted to own versus rent,” says Burgos, who now has 13 examining rooms as opposed to four and has added another medical provider to the staff. “But we also needed to expand because our patient population had expanded. This program turned out to be excellent. It happened so easily that I’m amazed,” he adds.

How the 504 Program Works

Under the 504 loan program, qualified businesses are required to put in 10 percent of a project’s cost, instead of the 20 percent usually required by commercial lenders.

After that, 40 percent comes from a non-profit, SBA-approved certified development company such as Florida First Capital Finance Corp. in Tallahassee or the Tampa Bay Economic Development Corp. in Tampa.  The remaining 50 percent comes from a participating commercial lender such as Mercantile Commercial Capital LLC, a 2-year-old licensed mortgage lender in Altamonte Springs, which helped with Burgos’ loan.

Although SBA officials can provide no hard data concerning the number of 504 loans issued in Florida or the United States, the lenders say that the loans, especially for office condos such as Burgos’, are gaining popularity.

The overall loan volume has increased 50 percent for the last five years, says Todd Kocourek, president of Florida First Capital, which had an Orlando office and is one of 10 certified development companies in Florida. And about 50 percent of the company’s 504 business in Central Florida is for office condos, he adds.

“What makes it very powerful is that like residential condominiums, you have all the benefits of ownership, while excluding some of the complications,” Kocourek says. “You don’t have to deal with construction issues and, down the road, maintenance is handled on a group basis.”

Other Positive Benefits

Chris Hurn, president and chief executive officer for Mercantile Commercial Capital, which specializes in 504 loans, calls it “a concept whose time has come.”

He’ll get no argument from Eddie Diaz, president of Encore Creations, and Orlando entertainment and events company. Diaz is using Hurn’s company for his 504 loan so he can soon move in to a 2,600-square-foot space that is five times larger than what he had.

“It helps you get into something that you normally could not afford, and they hold your hand through the process,” Diaz says. “I love the facility and the fact the money I put into it is mine. It’s like owning your own home.”

Apart from the down payment and maintenance benefits, Kocourek notes there are several other positives, including 10 or 20-year terms and interest rates fixed at usually one or two points below the conventional rates in one’s market area.

Properties with those assumable loans can be passed on to subsequent buyers as well, making it “a great selling point,” he says. Moreover, during legitimate emergencies for reasons such as health or hurricanes, all loan payments can be suspended for up to six months.

“Our reason for being is to see businesses become successful and jobs being created and sustained,” Kocourek says. “It’s affordable capital at reasonable terms.”