CDC stands for Certified Development Company. CDC's are non-profit corporations that are certified and regulated by the Small Business Administration to package, process, close and service 504 loans. The 504 loans are issued through a partnership between the CDC's, the private sector and third party lenders.
We currently partner with 14 EDC's in Chester, Lancaster, Bucks, Montgomery and Berks counties.
We strive to create jobs through the SBA 504 and 7(a) loan programs.
IEA stands for Initial Eligibility Assessment. This preliminary document determines whether or not we will be able to finance your project. Turnaround time for IEAs are two business days.
We follow a 45 day process. This means that from the first meeting with the borrower and lender to the bank closing, we guarantee a 45 day completion.
We only finance for-profit businesses. This includes owner-occupied structure, small businesses, most industries and solar projects.
Businesses attain many benefits through our different loan programs. These include reduced equity injection, longer term financing, increased loan sizes, no balloon provisions and the multiple uses of funds in one loan.
The biggest advantage of a 504 loan are reduced equity injection (10%-20% of project cost) and capital preservation. This means, the less money you dish out at the beginning, the more money you have in your pocket at closing.
Most loans structures are a 50/40/10 split and the 504 is no different. 90% of the financing comes from the bank and Seedcopa, while 10% is the equity injected by the borrower.
*Equity injection can vary from 10% to 20%, depending on the project and the borrower.
Yes. Each month 20 year rates are published. 10 year rates are published every other month.
The 504 loan deals with 3 distinct project structures:
The 7(a) loan program is a guaranty loan program, which means that the SBA does not make loans itself, but rather guarantees that loans are made by participating lending institutions.
There are multiple projects that are able to be financed through the 7(a) loan. These include the purchase, construction, renovation or improvement of buildings; acquisition or expansion; machinery and equipment purchases; inventory and supplies purchase; leasehold improvements; working capital; energy conservation loans and debt refinance/restructure.
According to SBA guidelines, for 7(a) loans, the owner needs to occupy at least 51% of the building. If constructing a new building, the occupancy rate rises to 60%. For 504 loans, occupancy rate for an existing building is 51% and for a new building it is 80%.
Any type of equipment is eligible, but it must have a minimum useful life of 10 years for the 504 program. Regarding the 7(a) program, the term of the loan equates to the useful life of the equipment.
The SBA may use a weighted average blended maturity or a maturity up to the maximum for the asset class comprising the largest percentage of Use of Proceeds.
In general, most hard asset acquisitions of companies that have 2 years of prior tax returns are required a 10% equity injection.
*Special purchase financing requires a 15% equity injection (i.e.: golf courses, bowling alleys, swimming pools)
*All start-ups or companies with less than two years of filed Tax Returns are required to inject 15%-20% equity at the time of closing and must possess that amount at the application stage.
Yes. All soft costs are able to be added back into the loan amount to help the small business owner preserve working capital.
The business net worth must be less than 15 million. After-tax net profit must be $5 million or less, on average, for the prior two years.
The 504 loan program is beneficial for lenders for many reasons: lower LTV, lower reserve requirements, reduced credit risk through partnership funding and the ability to gain CRA credits.