Business loans with as little as 10 percent down, low fixed interest rates and terms of up to 20 years: They’re the kind of deals you might think would catch the attention of more entrepreneurs.

Though many Iowa companies may not have been aware of it, they’ve had access to these types of attractive loans through the U.S. Small Business Administration’s 504 Loan Program for the past 23 years.

Johnston-based Iowa Business Growth Co. is the largest of five organizations known as certified development corporations that administer the SBA’s 504 Loan program in the state. Since 1981, Iowa Business Growth has lent about $87 million to Iowa companies, helping to finance approximately $251 million in business expansion projects. With a staff of just seven, it’s a “lean and mean” operation, said Dan Robeson, executive vice president of Iowa Business Growth.

“The neat thing about this program is it’s totally non-subsidized by taxpayers, and it’s creating significant economic development,” Robeson said. Though most CDCs are non-profit organizations, Iowa Business Growth is a for-profit company backed by 150 private investors, primarily banks. It’s also one of the few statewide CDCs in the country; most operate within designated regions of a state.

“Last year we had our highest loan volume ever,” Robeson said. “We financed $15.5 million in loans toward 29 projects totaling nearly $44 million in 21 Iowa communities. So far this year, we’ve had 36 projects with participation of $11.21 million in projects totaling $35.2 million.”

While it traditionally marketed its services almost exclusively to banks, Iowa Business Growth has recently stepped up its promotional efforts to include economic development organizations, chambers of commerce, trade associations and developers, Robeson said.

“We feel like we cover the state, but every year we find a bank that didn’t know about us,” he said. “To a certain degree, we feel like we’re the best-kept secret, and we’re not trying to be a secret.”

Though the 504 program isn’t geared to provide financing for start-up businesses, the company does a significant number of loans to new companies in which the entrepreneur has a proven track record in an industry, he said.

Other companies, such as Applied Art & Technology L.C. in Urbandale, are repeat customers of Iowa Business Growth Co. The media production company, which specializes in corporate videos and Web sites for clients that include Deere & Co., first used the program in 1997 to finance its building and again in 2000 for an expansion.

The program allowed the company to put just 10 percent down on each project, with its bank financing 50 percent and Iowa Business Growth financing the remaining 40 percent.

“That really works out well for a small company like ours,” said Ken Loneman, Applied Art’s operations manager. “We had the option of going with our bank to get the full dollar amount; our bank introduced us to the SBA and got the ball rolling. We appreciated that; it helped us out greatly.”

Steve McGill, president and CEO of State Bank & Trust Co. in Nevada, said the program has been advantageous both for the bank and its customers. In the past five years the institution has made about six such loans, most of them to finance business expansions.

“With the program, they can get into the property or finance equipment with 10 percent down, so that frees up that money for additional cash flow to buy more inventory or other uses, rather than having to go out and borrow that at higher interest rates,” McGill said.

“From a smaller bank’s standpoint, it allows us to loan on some special projects that we might otherwise be leery about getting into,” he added. “It’s really a pretty good program; it’s worked well for us up here.”

BIGGER TERRITORY

New rules enacted this year by the U.S. Small Business Administration will give Central Iowa businesses, as well as companies across the state, a wider choice of certified development corporations to handle their loans. Previously, the SBA required each CDC to operate only within its designated region when making loans.

“If it was outside their area, they’d have to pass it to us,” said Dan Robeson, executive vice president of Iowa Business Growth Co., a statewide CDC with offices in Johnston, Cedar Rapids and Cedar Falls. “Those territories have since been removed. The whole idea was to make it more competitive. I think with more CDCs kicking around for deals, they are going to be finding more deals in more nooks and crannies of the state.”

Des Moines’ CDC, the Corporation for Economic Development in Des Moines, can now participate in loans throughout Greater Des Moines, said Terry Vorbrich, the corporation’s executive director. The non-profit corporation has operated as a public-private partnership with the city since 1981.

“While we will still focus on the city of Des Moines, if the requests come in, we can now assist businesses in the much larger metro area,” Vorbrich said. In its 23-year history, the corporation, which also administers a revolving loan fund and micro-loan fund for the city, has assisted 190 locally owned small businesses, with the majority of the projects financed through the SBA’s 504 Loan Program. It has lent $26.6 million for new investments totaling nearly $72 million in Des Moines.