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CHATSWORTH, Calif. – Telesis Community Credit Union is considered by many in the industry to be one of the veterans of business lending. The $576 million CU recently provided a snapshot to House Small Business Committee’s Tax, Finance and Exports Subcommittee on the types of SBA 7(a) loans it has provided to its members. Grace Mayo, CUNA Business/SEG Services Task Force chairperson and president/CEO of Telesis Community CU, spoke at the committee hearing on the concerns CUNA has with possible fee increases from the SBA. On a $150,000 loan, for example, the borrower would have to pay between at least $1,500 and $2,500 because the agency charges points, Mayo said. “For small entrepreneurs, that really hurts because they need every dollar to go back into the business,” Mayo said. Some may have to resort to “hard money lenders” or capital investment groups which tend to want an equity percentage of their business, a move in the long-term that businesses “could pay dearly for,” she said. Still, Mayo is an advocate of the SBA’s programs as she shared some of the successes Telesis has had. One member took out a $250,000 SBA 7(a) loan to open a small, nontraditional form of health care business in southern California, Mayo said. The individual, trained in China in traditional Chinese medicine, was a top student in her class for each of the five years spent in medical school and won several awards for her outstanding achievements. Upon graduation, she worked in China for several years as a traumatologist, developing several treatment regimens for afflictions such as musculoskeletal pain syndrome and infertility. She came to the United States and is now currently licensed in California as a board certified acupuncturist. Mayo said she utilized the proceeds of her SBA guaranteed loan to purchase furniture and fixtures for her clinic, and the machinery and equipment needed to keep the ancient Chinese medicine current and up-to-date in the Western technological world. Mayo told the committee of another SBA 7(a) loan example. A member was approved for a $625,000 loan to expand her childcare program in Sacramento. The woman currently had an established program for two years, however the business struggled with finding adequate facilities to take on additional enrollments to enable the business to gain a stronger financial footing, Mayo said. Due to the tight financial picture, the owner was only able to put down 10% of the purchase price of $525,000 which made her ineligible for most commercial real estate programs – other than the SBA guaranteed 7(a) program. With their 10% down payment, Telesis was able to finance the purchase of the real estate for the new facility at $472,500 as well as provide additional funds to purchase furniture and fixtures costing $102,500 and supply much needed working capital at $50,000 to aid the business until construction was complete. The original facility could accommodate 54 children; the new facility now houses 110 children. – [email protected]

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