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Bridge or Interim Loan
A loan made to an authorized SBA 504 borrower typically for the entire amount of the project less the borrowers personal investment. This loan covers all costs including land and building acquisition, equipment purchase, and as appropriate, construction activities. This loan is repaid at the time of SBA 504 funding with up to 40% of the loan covered by the SBA 504 funds and the balance by the primary lenders first mortgage secured loan.
Certified Development Companies
Certified Development Companies are local public/private partnerships organized as non-profit community based corporations that provide SBA 504 financing to local small companies. They are "Certified" by the Small Business Administration to offer SBA 504 loans to eligible small businesses. They market, package, process, close and service SBA 504 loans as well as offer other economic development programs in their areas of operation. Preferred Lending Partners is the Certified Development Company for Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties of Colorado.
Community Redevelopment Act (CRA) Credits
These are credits granted to lending institutions by the Federal Government for loans related to Economic Redevelopment projects. For the specific detail, check the following sites: http://www.epa.gov/brownfields/html-doc/cra.htm http://www.occ.treas.gov/crainfo.htm
Public Policy Goals
The SBA has established goals for the SBA 504 loan program. The following are some of the target areas of economic development the program addresses.
Business District Revitalization: A project located within a business area of a community with a recognized revitalization or redevelopment plan.
Expansion of Exports: The business must derive at least 10% of its revenue from export sales at the time of the project.
Rural Development: Projects located in rural counties or in a metropolitan county with a resident population less than 20,000 and the SBA has determined such area to be rural.
Enhanced Economic Competition: A project business is engaged in advancement of technology, plant retooling (expansion or modernization of manufacturing facilities), conversion to robotics or competition with imports.
Changes Necessitated by Federal Budget Cutbacks: This is a project where the business is locating or expanding in an area impacted by Federal budget cutbacks, such as facility closing or cutbacks in defense related industries.
Business Restructuring Arising from Federally Mandated Standards of Policies: A project which affects the environment or the safety and health of employees, such as the installation of pollution control equipment, removal/encapsulation of asbestos, etc.
Development or Expansion of a minority and women owned business: Loans to Minority-owned firms. The ownership by the minority must be over 50%.
Personal Guaranties
It is a personal written acknowledgement and commitment by the borrowers who own 20% or more of the company that they will honor the terms of the note even if the business fails.
Principals & Owners
Owners must be US citizens or registered aliens with green card. Owners cannot be convicted felons currently on probation. Anyone who owns 20% or more of the operating company must personally guarantee (unsecured general guarantee). Liquid assets of the principals are taken into account in determining eligibility. Significant liquid assets owned by a principal could disqualify the loan because the project could be financed by the principal without SBA 504 assistance.
Small Business Administration (SBA)
The U.S. Small Business Administration, established in 1953, provides financial, technical and management assistance to help Americans start, run, and grow their businesses. SBA is the nation's largest single financial backer of small businesses. Last year, the SBA offered management and technical assistance to more than one million small business owners. The SBA also plays a major role in the government's disaster relief efforts by making low-interest recovery loans to both homeowners and businesses.
America's 25 million small businesses employ more than 50 percent of the private work force, generate more than half of the nation's gross domestic product, and are the principal source of new jobs in the U.S. economy. http://www.sba.gov
Treasury Bills
These are bonds issued by the US Treasury. Rates vary depending on the term and are set at time of sale on the public market. The SBA 504 program uses either the 10 or 20-year T-Bill rate to establish the debenture rate and in turn loan rate.
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