Small Business Loan Success Story

Case Study: Mountain Top Timber wood chips

A recent SBA 504 loan is getting a lot of attention these days, due to the tremendous impact of these community- and small business-focused loans. 504 Capital is proud to have played a role in this local economic boost, and we’re pleased to bring you the story:

Small Business Expansion

Mountain Top Timber in Wise County produces fine quality wood chips for use in paper, pulp, and more, in their 3 acre lot.

The high demand for their product doubled the size of their operations—just since 2016. It was clear that they needed to expand.

Total Project Cost: $1,360,000

  • 504 Capital financed
    $544,000 or 40%
  • VCC Bank financed
    $680,000 or 50%
  • Mountain Top Timber invested
    $136,000 or 10%

Mountain Top Timber decided to open a second location, and they wanted to improve upon the first. The new facility would offer a 117,000 sq foot factory building to streamline their process, enable enhanced product offerings, and extend their customer base internationally.

SBA 504 Loans Change Lives

The new production facility is located in Scott County’s Dungannon, VA. This location was selected due to its low-middle income population and rural setting. With the new facility comes the creation of 55 new jobs for the small town, a huge boost to the local economy. The new facility will reduce the cost of production of both wood chips and newer service lines.

The commitment to community doesn’t stop there—Mountain Top Timber is investing $14 million into VA-grown timber, sourced from local loggers and landowners.

How do SBA 504 Loans Work?

SBA 504 loans originate from partnerships between banks and nonprofits established by the government to aid economic growth on America’s Main Streets. These nonprofits are known as Certified Development Companies (CDCs). Participation in the 504 loan program is attractive to banks because it helps them manage risk while offering long-term financing to small businesses who truly need it. Low down payments and fixed interest rates from CDCs play a huge role in the success of these small business loans. 504 Capital is one such entity, and we exist to provide loans to growing small businesses, with the goal of growing the community and economy as a whole.

SBA 504 loans are intended to aid small business owners and rurally located manufacturers purchase what they need to expand. For Mountain Top Timber, they needed additional premises, raw materials, and equipment: a 36-foot sawmill for cost-efficient lumber production, dry kilns for dried lumber with loan proceeds at a higher profit margin, and construction of an electric-powered assembly line (the original facility runs on diesel). This change reduces production costs, lowering the overall cost for customers.

Additionally the purchase of a reconditioned Wood Chip Line will allow the workers to scan the chips for quality. This enables Mountain Top Timber offer a “clean” paper quality chip at a higher price point, for their most discerning customers.

Contact 504 Capital

when your small business is ready to grow.