fact sheet sba 504 program - SEED Corp

FACT SHEETSBA 504 PROGRAMBACKGROUND:SEED was certified in late 1982 by the U.S. Small Business Administration (SBA) topackage loans under the SBA 504 Program. SEED packages 504 loans throughoutMassachusetts, and most of Rhode Island.SEED is an SBA Accredited Lender. This designation enables SEED to obtain finalSBA approval on 504 loans in three to five business days. SEED is oneof the top SBA 504 lenders in Massachusetts.HOW IT WORKS:The SBA 504 Program provides a maximum of 40 percent financing of an eligibleproject. A bank selected by the applicant finances 50 percent of the project and takesfirst position on the equity. The applicant provides the remaining ten percent. The bankportion is financed at conventional rates and terms. The loan structure is discussedbelow:LOAN STRUCTURE: PARTICIPANTS AMOUNT INTEREST MATURITY(TYPICAL $1 MILLIONPROJECT) FINANCIAL INSTITUTION $500,000 (50%) Prime + - 7 Yrs for M & E(FIRST MORTGAGE)- 10 Yrs for Real Estateat a minimumSEED 504 DEBENTURE $400,000 (40%) 5-6% Fixed* - 10Yrs for M & E(SECOND MORTGAGE) (Effective Rate) - 20 Yrs for Real EstateAPPLICANT $100,000 (10%) (Additional 5% each for$1,000,000 (100%) a start up or special use bldg)*Visit our website for the latest effective interest rate.ELIGIBLE COMPANY:ELIGIBLE PROJECTCOST:For-profit corporation, partnership or proprietorship; industrial, commercialor service business; tangible net worth not in excess of $8.5 million; less than$3.0 million average net profit after taxes during previous two years.Acquisition of land and buildings; construction and/or renovation; leaseholdimprovements; equipment and furnishings; refinancing of related project debtup to 50%; interim interest; and professional fees for appraisals, surveying, accounting,engineering and architectural services.OCCUPANCY Business must occupy at least 51% of an existing building (may lease up to 49%);REQUIREMENT:and at least 60% of a newly constructed building (can lease 20% indefinitely).MINIMUM ANDMAXIMUM:GEOGRAPHICCOVERAGE:SEED’s minimum amount on a 504 debenture is $120,000 (a total projectof $300,000). The maximum is $5.5 million for manufacturers and projectsgenerating renewable energy or fuels and $5 million for all others. On projectssmaller than $300,000, SEED evaluates the benefits to the client, and may use its otherloan programs.SEED Corporation focuses on Barnstable, Bristol, Dukes, Middlesex,Nantucket, Norfolk, Plymouth and Suffolk counties in Massachusetts and Bristol,Kent, Newport and Providence counties in Rhode Island, but can package SBA 504loans throughout Massachusetts.

JOB REQUIREMENT:PROCESS:SBA requires that the company being financed demonstrate that it will create one job foreach $65,000 of SBA investment over a two year period. In a project of $500,000 withan SBA share of $200,000, the company would have to create four new jobs over a twoyear period. The job requirement may be waived, if other economic developmentgoals are met.SEED’s Loan Review Committee meets every month to approve loan applications orapproves loans via email, as necessary. Generally it takes 30 days to obtain fullapproval including the letter of authorization from the U.S. Small BusinessAdministration.If the participating bank agrees, however, the client can proceed with the project assoon as SEED approves the application. This approval can take twoweeks depending on when the client approaches SEED and if the clienthas the needed preliminary information:• A signed Purchase & Sale Agreement, if applicable;• 3 years historical financial statements and IRS returns for the business;• Interim financial statement no older than 90 days; and• Personal financial statements for principals with 20% or more ownershipand personal IRS returns for the past 2 years;• Property appraisal and environmental assessment can be submitted toSEED after approval.ADVANTAGES:The 504 Program offers the following advantages:• Financing for a fixed asset project with generally only 10% down;• No application form or deposit required;• Inclusion of soft costs, equipment, and furniture and fixtures minimizeout of pocket expenses and preserve cash for the business; and• Program allows reliance on financial projections – for start ups and businesseswith inadequate historic cash flow;• Most small businesses are eligible; and• SEED can provide small loans up to $200,000 at 5% fixed to replace workingcapital used for down payment on an SBA 504 project.FEES:SEED STAFFASSIGNED TOTHE PROGRAM:There are one time packaging fees of 2.65% on the SBA 504 loan amount (not the totalfinancing). These fees are rolled into the SBA 504 loan. In addition, there are servicingfees to SEED and SBA. These fees are included in the effective fixed rate quoted bySEED. There is a prepayment penalty for the first half of the term of the debenture.SEED’s fees are lower than other 504 lenders.Lisa Holmes, Senior Vice President, Lending Team LeaderAnne Trevisani, Vice President, Commercial Loan OfficerLaurie Driscoll, Assistant Vice President, Commercial Loan OfficerLindsey Williams, Assistant Vice President, Commercial Credit AnalystFrank Celino, Vice President, Business Development OfficerSusann Patterson, First Vice President, Cape Cod Business Development OfficerAnn Desrosiers, Vice President, Operations and Portfolio ManagementAnne Rounds, Assistant Vice President, Closing ManagerSidonia Silva-Reyes, Commercial Lending and Operations OfficerFOR MORE INFORMATION, PLEASE CONTACT SEEDPhone: (508) 822-1020 Fax: (508) 880-7869Email: info@seedcorp.com Website: www.seedcorp.comSEED is an equal opportunity lender and business assistance provider.