HASBROUCK HEIGHTS, NJ-Today's real estate market offers a hostof challenges that the US has not experienced for decades, but italso offers some opportunities, which is exactly what 30-year realestate veteran William Procida and James Kocsi, director of the USSmall Business Administration's New Jersey district office,discussed here on Tuesday as part of the Commerce and IndustryAssociation of New Jersey's Real Property Roundtable.

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"We really like what the government is doing for smallbusinesses right now," said Kocsi, who outlined the SBA loanprograms for attendees, which included everyone from accountantsand appraisers to insurers and lenders. In fact, there are morethan 10 loan programs that small businesses can take advantage of,including the SBA's primarily loan program, the Loan Guaranty,which carries a maximum amount of $2 million, with a 90% guaranty;the total SBA guaranty cannot exceed $1.5 million. This loan ispredominately used for renovation or construction of a newfacility, says Kocsi, as well as land or building purchases,equipment, fixtures, leasehold improvements, working capital,refinancing debt and inventory acquisition.

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Kosci also highlighted the 504 Loan Program, also known as theCertified Development Company Program, which provides long-term,fixed-rate financing to help expanding small businesses grow. Theseloans are for acquiring long-term fixed assets, such as land,buildings, machinery and equipment, or for building, modernizing,renovating or restoring facilities. "Generally, CDCs are nonprofitcorporations set up to contribute economic development in theirlocal communities," said Kosci. He added that a 504 projectincludes a third-party loan secured with a senior lien on thefinanced asset from a private-sector lender covering 50% of theproject cost' a 540 loan secured with a junior lien made by a CDCfunded by a 100% SBA guaranteed debenture) covering 40% of theproject cost; and a contribution of at least 10% equity from theborrower.

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"Growing businesses are often unable to qualify for traditionalfinancing because of the difficult of coming up with a down paymentof 30% or more," said Kosci. "When a conventional loan is notpossible, a 540 may be the answer." The SBA's other loans rangefrom a $35,000 MicroLoan--made through a nonprofit lendingorganization--to a $5-million Surety Bond Guarantee Program, whichbumps up to $10 million if all of th contracts are federalones.

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William Procida Inc.'s president then took the stage to discussmarket opportunities. "There are big opportunities in one- tofour-family housing right now," he told the audience. "The reasonis volume. In the past six months alone, there were 80,000foreclosures but only 8,000 sold at auction." Procida likened thehousing market to a funnel with a stone in the bottom, which willeventually shake loose. He predicts that by fourth quarter 2010there will be a deluge of one- to four-family housing opportunitiesnationally. "These are assets that are in foreclosure or REO, sothey are typically beat up and non-habitable, creating a greatopportunity for the industry to morph into property owners."

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The second area of opportunity, according to Procida, is "thetremendous amount of half built jobs. Banks are not pushing onforeclosures and developers are underwater," he continued. "Beforewe see development again, we need to finish what we started." Thiscould mean a focus on smaller infill projects around megadevelopments.

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