Date post: | 22-Dec-2014 |
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Self-Help Ventures Fund
SBA 504 Loan ProgramOverview August 2012
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About Self Help
• Non-profit Community Development Financial Institution founded in 1980
• Mission: Creating and protecting ownership and economic opportunity for all, especially people of color, women, rural residents and low-wealth families and communities.
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Programs
• Home loans• Small business & non-profit loans• Community development &
neighborhood revitalization • Nationwide advocacy
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504 Loan Program
US Small Business Administration
Certified Development Company (CDC)
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504 Program Goal
Foster economic development and job creation
by supporting small business growth
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How do we do that?
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Are small businesses facing challenges in accessing capital to finance facilities and equipment in today’s market?
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How do we do that?
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By partnering with traditional commercial lenders to make loans
Providing:
•Long-term financing for business expansion
•Encourage small businesses to make new capital investments
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SHVF / SBA
$800,00040%
Borrower $200,000 10%
+5% startup+5% special purpose
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504 Loan: Typical Financing Structure
FUNDINGSOURCE
PROJECTCOSTS
LIENPOSITION
LOANTERM
RATE
Commercial
Lender
50% 1st 10 Yr7 Yr (M&E)
Variable or fixed
SBA/SHVF 40% 2nd 20 Yr10 Yr (M&E)
Fixed
Borrower 10%
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What kinds of businesses use 504 loans?
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• For Profit Business
• Meets SBA definition of “small”
• Wants to limit capital contribution to fixed assets
• In a position to grow, or restructure existing borrowing
• Financing Real Estate or Durable Equipment
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Local 504 Borrowers
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Local 504 Borrowers
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Local 504 Borrowers
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Local 504 Borrowers
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Local 504 Borrowers
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Local 504 Borrowers
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Why do businesses use 504 loans?
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Appeal for Small Businesses
• Access to capital
• Up to 90% financing/Low down payment (10%)
• Long-Term, Fixed-Rate (40%) on 504 loan
• More capital to fund growth
• Finance soft-costs
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Appeal for Lending Partners
• 50% LTV, 1st lien on project assets (limited risk)
• Competitive edge: Competitive/Creative approach to attract and retain new clients
• Preserve customers and strengthen relationships
• Stronger cash flow for clients
• Participate in deals not meeting all of bank’s criteria
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Appeal for Community
• Foster Business Growth
• Job Creation and Retention
• Local Economic Stability
• Tax Base
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Contact UsDon’t Hesitate to call or email, its why we
are here
•Charlie Cleary (919) 956-4629
•www.self-help.org/504loans
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