Photo courtesy Moonloop Photography LLC -
When it comes to low-interest government loans, the SBA 504 and SBA 7(a) tend to steal the spotlight. But a popular alternative is shouldering in.
Such was the case for Jeremy and Lauren McComsey, owners and operators of McComsey Automotive. The couple wanted to purchase the building their competition once occupied in their life-long hometown of Oxford, Chester County, Pennsylvania. While working with their partner bank, the SBA 504 loan initially seemed like a good fit with its below-market, fixed interest rates. But ultimately the eligibility requirements just didn’t work for this business.
It was difficult news to hear. “We grew up together in Oxford, married here and are raising our family here. We wanted to stay in Oxford and grow a business here,” said Lauren.
McComsey Automotive ended up being an ideal candidate for the Pennsylvania Small Business Credit Initiative (PSBCI). Established through the Jobs Act in 2010, Seedcopa was chosen by the Commonwealth of Pennsylvania to administer funds by making loans to small businesses. Since then, this program has become an internal revolving loan fund for Seedcopa, a more flexible loan program that can structure more creative solutions.
For this project, McComsey Automotive received a loan for its building purchase and closing costs. 50% was financed by the partner bank, Northwest Bank, formerly Union Community Bank. Another 40% was financed by PSBCI, Seedcopa’s revolving loan fund, and the borrowers injected 10% in equity.
“The PSBCI is what we call a ‘second lien instrument.’ This benefits borrowers because it gives the primary lender the ability to approve loans that might otherwise be declined,” said Seedcopa Managing Director Sherwood Robbins. “That’s why it’s always worth a quick discussion to determine your company’s eligibility. Although businesses may not use PSBCI to refinance existing debt, most other uses of funds are eligible.”
Now McComsey Automotive owns its own building at 11 East Lancaster Avenue in Oxford, instead of renting right around the corner. They’ve retained the mechanic who worked for the previous auto repair shop that occupied the space. They’ve also grown their business by retaining clients from the location as well as acquiring new customers. Considered an essential business during the COVID-19 shutdowns, McComsey Automotive is having a busy summer as vaccinated people are hitting the road more and spending stimulus money on repairs they might have put off.
“My message to other businesses is: Don’t give up. Really. Seedcopa came up with a solution that worked for us,” said Lauren. “We are so thankful to our entire Oxford community for continuing to help support and grow our family business. We all support each other in this town, and it shows.”