SBA 504 Loan Program
RDFC offers direct loan funds to borrowers, not loan guaranties, as do other SBA programs. In general, a SBA 504 eligible project is one which meets at least one of several program goals:
Job Creation:
• 1 job created or retained per $50,000 of 504 loan funds
Community Development:
• Manufacturing firms
• Stimulate creation of other business in community
Public Policy:
• Women-owned
• Minority-owned
• Veterans
• Rural development
Eligible Businesses:
Generally, any for profit business engaged in a legal enterprise, with a tangible net worth of less than $7.5 million and average net income for the preceding 2 years of less than $2.5 million. Start up businesses are eligible. However, the borrower will be required to provide an increased equity position. RDFC considers many factors when underwriting a proposed loan. Cash flow and the ability to repay all project debt are primary considerations.
Use of Funds:
The SBA 504 loan program is a fixed asset based program. Eligible project costs include land acquisition and improvements, purchasing or remodeling an existing building, new construction, and machinery and equipment purchases. Certain other project related costs, including SBA 504 loan fees may also be included.
Loan Size:
The SBA loan financing can be as much as 40% of SBA-eligible project costs, up to $1,500,000. For certain projects meeting a Public Policy Goal, the 504 loan amount may be as great as $2,000,000.
Small manufacturers may qualify for loans up to
$4,000,000.
Loan Terms:
Interest rates are typically competitive with commercial bank rates. However, unlike most bank loans, rates are fixed for the term of the loan, which is 10 years for machinery and equipment projects and 20 years for projects involving real estate.
Typical Structure:
SBA 504 loans require the participation of a commercial lender (or other eligible source of financing) and a modest amount of borrower equity. A typical structure involves 50% commercial bank financing, 40% SBA 504 financing, and 10% borrower equity, however, other financing structures are possible. Additional borrower equity will be required for start-ups.
EDA Revolving Loan Program
The EDA Revolving Loan fund is available to businesses in the City of Pittsburgh and County of Allegheny pursuant to the guidelines set forth below.
General:
One job must be created for every $30,000 borrowed. Borrower must be creditworthy, provide adequate collateral, and personal guarantees. Federal prevailing wage laws may apply to certain projects. Projects must comply with applicable federal, environmental, and historical preservation guidelines. Borrowers are encouraged to use the City’s or County’s Job Training Partnership Act program.
Eligible Businesses:
Generally, any for profit business engaged in a legal enterprise, located in the City of Pittsburgh or County of Allegheny. Start-up businesses are eligible. Public or quasi-public organizations are eligible if the financed activity directly benefits an identifiable business. RDFC considers many factors when underwriting a proposed loan. Cash flow and the ability to repay all project debt are primary considerations.
Use of Funds:
Eligible project costs include land acquisition and improvements, purchasing or renovation of an existing building, machinery and equipment purchases, and working capital.
Loan Size:
EDA loan financing is usually 33% of EDA-eligible, project costs. However, up to 50% of project costs may be considered on a case by case basis. The minimum loan amount is $25,000. The maximum EDA loan amount is $250,000.
Loan Terms:
Interest rates are typically competitive with commercial bank rates. However, unlike most bank loans, rates are fixed upon approval for the term of the loan. The Term will match the participating lender, up to 10 years for projects involving real estate, up to 7 years for machinery and equipment projects, and up to 5 years for working capital.
Typical Structure:
EDA loans require the participation of a commercial lender, or other eligible source of financing. A typical structure involves commercial bank financing, EDA financing, and borrower cash equity. Other financing structures are possible.
Costs:
A $750 application Fee is due at the time of application. A Closing Fee in the amount of 1% is due at the time of Commitment Acceptance and includes document preparation costs. A 1% Annual Servicing Fee (minimum of $250.00) based on the loan’s outstanding balance is due annually.
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