Bay Colony

SBA 504 loans for small business

Utilizing the U.S. Small Business Administration’s Section 504 Program(http://www.baycolony.org), Bay Colony Development Corp. provides growing businesses with long-term, fixed-rate financing for the purchase of major fixed assets, such as land, buildings, machinery and equipment. Operating as a Certified Development Company, Bay Colony is a nonprofit corporation established to contribute to the economic development of local communities in Massachusetts., Rhode Island, New Hampshire, Vermont, and Connecticut. We work with the SBA and private-sector lenders (primarily banks) to provide financing to small businesses. Typically, 504 project financing includes a loan secured with a senior lien from a Banker/Lender covering up to 50 percent of the project cost, a loan secured with a junior lien from Bay Colony (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped. The latter amount can be in the form of cash into the project or, if an expansion project, existing equity in the project real estate.

Maximum Project Size None Maximum 504 Debenture $1.5 to $4.0 million, depending on whether your business meets an approved public policy goal or is classified as a small manufacturer (NAICS codes beginning with 31, 32 or 33) Typical Financing Structure 50% Bank Financing, 40% 504 Financing, 10% Borrower’s Equity Minimum Equity Requirements Generally, 10% is standard, 15% if you have not owned the business for two or more years (Start-up); 15% if the real estate is considered special use (ex. skating rink, hotel); 20% if the project is both a start-up and special use. Note: seller financing of all or part of the equity requirement may be allowed if certain conditions are met. Call for details. Loan Fees Approximately 2.15% of debenture amount, which can be rolled into the loan. Legal costs for the debenture are typically $2,000 to $3,000 depending on the loan size. Bank Participation Fee One time 0.5% of Bank Loan Occupancy Requirement Owner must occupy at least 51% of an existing building. For new construction, owner must agree to occupy 60% of the building with plans to occupy 80% within 10 years. Personal Guarantees Required of all owners of 20% or more of the operating company or real estate entity. Approval Limit The approval is good for 48 months Assumable Yes, prepayment penalty is waived, a small assumption fee is usually charged (e.g., 1.0% of loan balance). Note: the buyer is expected to be as strong financially as the seller. Alternatively, the buyer can apply for a new 504 loan. Refinance Existing Debt and Borrower's Cash Injection Usually not allowed unless the loan or injection took place no more than 9 months prior to application. There are exceptions on a case by case basis. Type of Business Must be for profit (with a few exclusions)

contact us :: if you want to contact please visit our site :: http://www.baycolony.org 1601 Trapelo Road, Suite 222 Waltham, MA 02451 Phone: 781-891-3594 Toll-Free: 888-355-6663 Fax: 781-647-4950

Contact a Loan Specialist: Mike Topalian: 781-478-3650 Jim Norris: 781-478-3652 Dave Perez: 781-478-3653