Source

Notes

Financial Resources
A number of resources are available to help finance economic development projects. In this section you can access details on program requirements, eligibility criteria, rates, terms and contact information. Click on a link below to navigate to the program information you’re interested in.

Entity and Resource Available

Micro-Enterprise Loan Program

Minnesota Community Capital Fund

MCCF Loan Fund

Minnesota Business Finance Corporation

SBA 504 Loan Program

Minnesota Investment Fund

Minnesota Department of Trade & Economic Development

Small Business Development Loan Program

Rural Challenge Grant Program

Small Business Administration

SBA 7(a) Loan Program

SBA Express Loan Program

HUTCHINSON ECONOMIC DEVELOPMENT AUTHORITY

Economic Development Loan Fund

• Businesses must be located, or be willing to relocate, within the city limits of Hutchinson.
• Manufacturing, assembly, warehousing, research & development facilities, call centers  & administrative processing centers are    eligible.

• At least one job created is required for every $25,000 in assistance provided.
• Wages for jobs created must be at least $10.19 per hour, exclusive of benefits.
• Funds can be used for land & building purchase, building construction, renovation and / or expansion, machinery & equipment,    working capital and inventory.
• Immediate repayment of the outstanding balance is required if the business relocates outside Hutchinson

• Rates range from a flat rate of 2% up to Prime + 3%, as determined by the EDA Board. Typically rates will be similar to those    available from a commercial lender.
• Loan terms up to 10 years are available.
• Loan amounts up to $150,000 are available.
• Applicants creating a significant number of jobs or paying higher wages may receive preferential loan terms.
• The EDA will typically subordinate to other financing sources when needed.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for a loan application and additional information.

Equipment Loan Fund

• Businesses must be located, or be willing to relocate, within the city limits of Hutchinson.
• Manufacturing, assembly, warehousing, research & development facilities, call centers & administrative processing centers are    eligible.

• Funds can be used only for machinery & equipment purchases
• Immediate repayment of the outstanding balance is required if the business relocates outside Hutchinson.
• There are no job creation requirements for this program.

• Rates range from a flat rate of 2% up to Prime + 3%, as determined by the EDA Board.
• Loan terms up to 7 years are available.
• Loan amounts up to $40,000 are available.
• Applicants creating a significant number of jobs or paying higher wages may receive preferential loan terms.
• The EDA will typically subordinate to other financing sources when needed.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for a loan application and additional information.

Tax Increment Financing

In all cases the proposed project must pass what is called the “but-for" test, meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. In other words: if the project can be done without TIF, then it is ineligible for this assistance.

For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings.

Different rules apply to each type of TIF district (see below):

Economic Development TIF District – A 9-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for industrial-type projects.

Redevelopment TIF District - A district that can go up to 25 years and will provide funds for the removal of blighting conditions on a lot (sub-standard buildings, site clean-up, etc.).

• The Hutchinson City Council, following a public hearing on the proposed project, must approve all TIF Districts.
   Economic Development TIF
• Industrial, warehousing, research & development and call centers are eligible.
   Redevelopment TIF
• Proposed district must contain existing “blighted” development
• At least 70% of the area must be occupied by buildings or other improvements.
• At least 50% of the buildings themselves must be substandard, based upon an internal inspection.
• A building is considered substandard if it would cost at least 15% of a new building to bring the existing building up to current    building code requirements.
• As long as the above requirements are met, any type of project (commercial, retail, industrial) is eligible.

   Economic Development TIF
• The TIF district must promote new employment, tax base or retain business in the state.
   Redevelopment TIF
• At least 90% of the tax increment generated must be used to correct the blighting conditions.

  • All TIF districts in the City of Hutchinson will be set up on a “pay-as-you-go” basis – meaning that tax increment will flow
     back to the developer in semi-annual payments.

If the project requires “up-front” financing, a loan may be secured from a private lender, with the projected tax increment being pledged to service the loan.
   Economic Development TIF
• Districts can provide tax increment for up to 9 years.
   Redevelopment TIF
• Redevelopment TIF district can provide tax increment for up to 25 years.

For additional information about Tax Increment Financing, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

Job Opportunity Building Zone

Job Opportunity Building Zones (JOBZ) are designed to stimulate economic activity within certain geographical areas by providing a number of state & local tax breaks for qualified businesses.

Exemptions are provided for:

• corporate franchise tax
• state income tax for operators or investors – including capital gains tax
• sales tax on goods & services used in the zone,
• property tax on commercial & industrial improvements (but no exemption on land)

Additionally:
• An employment tax credit is provided for high paying jobs.

• Eligible businesses include those starting-up or expanding within a designated Zone, businesses relocating from other states and    business relocations within Minnesota, provided certain job creation requirements are met.
• Businesses must locate within a designated JOBZ zone.
• Retail businesses are not eligible.

• Jobs created must pay at least 110% of the federal poverty level for a family of four (including benefits not mandated by law)
• Businesses relocating within Minnesota must increase their total employment by at least 5 jobs or 20% of their workforce,    whichever is greater. These new jobs must be maintained for the duration of the JOBZ zone.
• Businesses locating in a JOBZ zone must sign a Development Agreement with the City.

For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

Tax Abatement

With Tax Abatement, the city rebates its portion of property taxes back to the property owner who then uses it to help offset development and / or redevelopment costs. Tax abatement is simpler and less restrictive than tax increment financing, and is quite useful for smaller projects.

In addition, the availability of tax abatement is limited – in any given year, for all economic development projects taking place, the city can abate an amount equaling no more than 10% of its current tax levy.

The Hutchinson City Council must approve all tax abatements.

• Tax abatements can be provided for any type of property.

• The project must provide one or more of the following public benefits: it must increase or preserve tax base, result in job creation,    redevelop blighted areas, and / or provide services not currently available to the residents of Hutchinson.

• Taxes can be abated for up to 15 years (in some instances 20 years).

For additional information about Tax Abatement, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

Downtown Commercial Rehabilitation Loan Program

The Downtown Commercial Rehabilitation Loan Program is intended to provide an additional financial resource and incentive for downtown property owners to improve their place of business. The goal of the program is to help keep downtown Hutchinson a thriving and attractive place for commercial & retail activity.

• Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue    on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
• Total debt (including this loan) secured by the property cannot surpass 100% of the assessor’s estimated market value, or the    appraised value of the property, whichever is greater.
• Eligible exterior improvements include windows & doors, painting & other façade improvements, roofs, foundations, lighting,    accessibility improvements, parking lots and landscaping.
• Eligible interior improvements include general remodeling, HVAC, electrical, plumbing and handicap accessibility.
• Funds cannot be used for security systems, equipment or furniture.

• No more than 30% of the loan can be used for interior improvements other than heating, electrical, plumbing, insulation,
   handicap accessibility and asbestos abatement.
• Loans are immediately due if the property is sold or otherwise transferred.
• All owners are must join in the application.
• All loans must be secured by a mortgage on the property.
• A personal guarantee is also required.
• There is a $200 application fee.

• The minimum loan amount is $3,000
• The maximum amount available is $65,000 per lot for up to two lots, or 10% of the total project cost, whichever is greater.
• No more than $130,000 is available for any particular project.
• Interest rates are fixed.

Two options are available for interest rates and loan terms:

• 2% below the current prime interest rate for a 10-year term
  or
• The current prime rate for a 15-year term

Contact the Hutchinson Economic Development Authority at (320) 234-5652, or send an email, for a loan application and additional information.

Downtown Storefront Revitalization Matching Grant

The Storefront Revitalization Grant Program is intended to offer dollar-for-dollar matching funds for property owners in the downtown area so they can make exterior improvements and generally improve the “curb appeal” of their property.

• Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue    on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
• Applicants must provide a personal dollar-for-dollar match for any grant funds awarded, although work done personally by the    property owner can count as the match.
• Only one grant per property will be awarded during any given 5-year period.
• Additions, new buildings, decks and playground equipment are not eligible.
• Eligible improvements must be viewable from the public right-of-way and may include windows & doors, painting & other façade    improvements, exterior lighting and landscaping.

• Any improvements must be completed and inspected prior the disbursement of any grant funds.
• Work cannot commence until the grant is approved and should be completed within 120 days, weather permitting.
• Invoices must be submitted in order to receive reimbursement.

• Grants range from $500 to $5,000.

Contact the Hutchinson Economic Development Authority at (320) 234-5652, or send an email, for a grant application and additional information.

Downtown Sign & Awning Grant

This program is intended to provide property owners with a resource and incentive to add, improve and / or replace signage & awnings in the downtown area.

• Properties must be located in downtown Hutchinson within the following boundaries: the Crow River on the north, Fourth Avenue    on the south, properties with frontage on the west side of Franklin Street and the east side of Hassan Street.
• Funds can be used only for the repair, improvement or replacement of signs & awnings.
• Only one grant per business will be awarded.

• Businesses who lease space must get written approval from the owner of the property.
• Work cannot commence until the grant has been approved, and should be completed within 120 days, weather permitting.

• Grants range in size from $500 to $2,000.
• Improvements must be completed before any grant funds can be disbursed.

Contact the Hutchinson Economic Development Authority at (320) 234-5652, or send an email, for a grant application and additional information.

MID-MINNESOTA DEVELOPMENT CORPORATION

The mission of the Mid-Minnesota Development Commission is to provide technical assistance to government, businesses and local organizations; administer state and federal programs, and coordinate multi-jurisdictional activities to maintain or enhance the quality of life in the Counties of Kandiyohi, McLeod, Meeker and Renville.

To that end they have created a revolving loan fund utilizing federal dollars to assist businesses within the four county area.

Regional Revolving Loan Fund

• Business must be “for-profit”
• Must be located in McLeod, Meeker, Kandiyohi or Renville County
• Must have a demonstrated need for gap financing
• Manufacturing, Retail and Service businesses are eligible

• Job creation is required, preferably 1 job per $10,000 of funds provided
• Funds can be used for real estate, equipment and / or working capital
• Amount of loan is generally limited to no more than 1/3 of the total project cost.
• At least 10% owner equity is preferred, though not always required.

• Loan amounts range from $5,000 to $100,000
• Interest rates are determined on a case-by-case basis and may as low as 2% below Prime.
• Typical loan terms are:

Working Capital - 5-year maximum
Machinery & Equipment - 5-year balloon
Real Estate - Up to 10-year term with up to 20-year amortization

• A $25 application fee and a 1% origination fee is required.
• Applicant pays all closing, legal and filing fees at the time of closing.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email, for additional information. Otherwise you can get in touch with:

Les Nelson
Mid-Minnesota Development Commission
333 West 6th Street
Willmar, MN 56201
Phone: (320) 235-8504
E-mail: midmndevcom@willmar.com

SOUTHWEST INITIATIVE FOUNDATION (SWIF)

The Southwest Initiative Foundation (SWIF) is a regional foundation funded both by the McKnight Foundation and regional partners from throughout southwestern Minnesota. One of SWIF’s primary goals is to promote community and economic development in the 18 county area.

To help make southwest Minnesota a highly productive, engaged and growing region, the Southwest Initiative Foundation has a number of loan programs available for growing businesses and for facilitating community development projects.

Applicants are encouraged to call or visit the Southwest Initiative Foundation at an early state in the development of their business to complete a needs assessment. This will help determine the level of assistance needed and the overall feasibility of the project.

Assistance is available in both Spanish and Somali.

Revolving Loan Fund

• Any business creating and retaining quality jobs is eligible.

• Funds may be used for machinery & equipment, inventory, working capital and, in certain circumstances, real estate.
• Adequate collateral for the loan is required.

• Loan sizes typically range from $25,000 to $200,000.
• Interest rates are fixed at one percent under the Prime Rate, with a floor of 6%.
• Loan terms are based on the life of the asset although typically not more than 5 years.
• Loan may have amortizations exceeding 5 years, buy they will require a balloon payment at the end of year 5.
• Loans may be subordinated to the primary lender bank.
• There is a 1% loan origination fee.
• All legal costs associated with the loan are the responsibility of the borrower.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email for additional information. Otherwise you can get in touch with:

Josh Gehlen
Business Credit Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800)594-9480
E-mail: loans@swifoundation.org

Renewable Energy Loan Program

• Businesses involved in energy production or secondary businesses that support the renewable energy industry are eligible.
• Also eligible are projects that promote energy usage conversion and / or new & emerging technologies.

• Funds may be used for up-front development costs, land, buildings or building improvements, machinery & equipment, inventory    and working capital.
• Adequate collateral is required on all loans.

• Up to $500,000 is available, although loans cannot exceed 25% of total project costs.
   EXCEPTION: Energy conversion projects may qualify for 100% financing if there is bank participation in other aspects of the    business.
• Typically interest rates will be at the market rate, although these will be determined on a case-by-case basis considering the    perceived risk of the loan.
• Loans may be subordinated to the primary lender bank.
• There is a 1% loan origination fee.
• All legal costs associated with the loan are the responsibility of the borrower.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email for additional information. Otherwise you can get in touch with:

Josh Gehlen
Business Credit Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800)594-9480
E-mail: loans@swifoundation.org

Regional Centers Loan Program

The Regional Centers Loan Program is designed to support business ventures that contribute to regional economic growth.

• Businesses must be for-profit and engaged in the manufacturing, professional or technology sectors of the economy.
• Projects must be located in one of the four regional centers of southwestern Minnesota: Hutchinson, Marshall, Willmar or    Worthington.

• Funds can be used for machinery & equipment, inventory and working capital.
• Adequate collateral is required on all loans.

• Loans up to $500,000 are available.
• Interest rates are fixed at 1% under the Prime Rate, with a floor rate of 6%.
• Term of loan is based on the life of the asset and will match the term of other project lenders.
• Loans may be subordinated to the primary lender bank.
• There is a 1% loan origination fee.
• All legal costs associated with the loan are the responsibility of the borrower.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email for additional information. Otherwise you can get in touch with:

Josh Gehlen
Business Credit Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800)594-9480
E-mail: loans@swifoundation.org

Micro-Enterprise Loan Program

Designed specifically to help entrepreneurs develop small businesses and self-employment opportunities, the program provides funding as well as customized support, on-going technical assistance and training as needed for the length of the loan.

• Both start-up and expansion projects are available.
• Eligibility includes, but is not limited to, manufacturing, service, retail and daycare businesses.

• Funds can be used for start-up costs, equipment, inventory, furniture & fixtures and / or working capital.
• Funds cannot be used for the purchase of real estate, building renovation or debt refinancing.
• Loans must be secured with collateral.
• The borrower should provide equity to the project.
• Borrower will be responsible for all loan processing and filing fees.

• Loans range from $500 to $35,000.
• Interest rates start at 9%.
• Loan term shall be limited to a maximum of 6 years.

Several options exist. Customers can apply for these small business loans directly at a participating bank and some loan applicants who qualify may be eligible for a lower interest rate.

Here in Hutchinson the following banks are currently participating in the program:

Citizen’s Bank & Trust

For additional information contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.
Otherwise you may contact:

Josh Gehlen
Business Credit Officer
Southwest Initiative Foundation
15 3rd Avenue NW
Hutchinson, MN 55350
Phone: (800)594-9480
E-mail: loans@swifoundation.org

MINNESOTA COMMUNITY CAPITAL FUND

The Minnesota Community Capital Fund (MCCF) is a statewide revolving loan fund that makes use of underutilized local Revolving Loan Fund (RLF) capital. By pooling local RLF dollars, the Fund provides participants with greater lending flexibility, the capability of offering much larger loans than would otherwise be possible, and professional fund management services.

The Hutchinson Economic Development Authority has contributed $25,000 to the MCCF and, consequently, is able to leverage up to ten times that amount ($250,000) for local economic development projects.

MCCF Loan Fund

• Virtually any type of business is eligible.

• A private lender must be involved in the project.
• Cannot be a business start-up.
• Funds may be used for real estate, machinery & equipment and / or working capital.
• At least 10% of the project must be funded by owner equity.
• The projects loan-to-value ratio cannot surpass 100%
• Personal guarantees are required for all owners of 20% or more of the project.

• Loan amounts of $50,000 to $250,000 are available.
• Interest rates are determined on a case-by-case basis.
• Up to 20-year terms are available for real estate.
• Terms up to 10-years are available for machinery & equipment.
• There is a 1.75% loan origination fee and a 0.5% loan underwriting fee.
• Borrowers are responsible for all legal and other loan closing costs.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email, for additional information. Otherwise you can get in touch with:

Bob Palmquist
Senior Loan Officer
221 West First Street
Duluth, MN 55802
Phone: (218) 529-7562
E-Mail: bpalmquist@mncommunitycapitalfund.org

MINNESOTA BUSINESS FINANCE CORPORATION

The Minnesota Business Finance Corporation (MBFC) is a nonprofit corporation set up to contribute to the economic development of the central Minnesota region. As a 504 Certified Development Company (CDC), the MBFC works with the Small Business Administration and private sector lenders to provide financing to small businesses.

Through the SBA 504 Loan Program, the MBFC provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.

Typically, a private lender will provide 50% of the project financing while 40% is funded by a debenture guaranteed by the Small Business Administration. The remaining 10% is equity provided by the borrower. The extent of the SBA’s participation is usually $1,000,000 although $1.3 million may be available under certain circumstances.

SBA 504 Loan Program

• To be eligible, the business must be operated for profit, have a tangible net worth of less than $7 million, and have an average
   net income that is less than $2.5 million after taxes for the preceding two years.

• Loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading,
   street  improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or
   converting existing facilities; or purchasing long-term machinery and equipment.
• Funds cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.
• 1 job must be created for every $35,000 received.

• Interest rates are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.
• Terms of 10 or 20 years are available.
• Fees typically total 3% of the debenture.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email, for additional information. Otherwise you can contact:

Nadine M. Kruize
Minnesota Business Finance Corporation
616 Roosevelt Road, Suite 200
St. Cloud, MN 56301
Phone: (320) 255-1685
E-mail: nkruize@mbfc.org

MINNESOTA DEPARTMENT OF EMPLOYMENT & ECONOMIC DEVELOPMENT (DEED)

Minnesota Investment Fund

The Minnesota Investment Fund (MIF) was created to facilitate the creation & retention of high quality jobs on a statewide basis, increase both the local & state tax base, and to improve the economic vitality of the state. The focus of the program is on industrial, manufacturing and technology related businesses.

• Cities, counties & townships can apply for funding on behalf of an expanding business.
• Grants are awarded to local governments who, in turn, make loans to qualified businesses.
• Funds cannot be used for retail businesses, industrial park development or working capital.

• Funds must be used for land, buildings, equipment or training costs.
• Funds may also be used for infrastructure improvements to support businesses.
• MIF participation is limited to 50% of total project costs (most projects selected for funding have at least 70% of their financing    coming from other sources)
• Jobs created must pay at least $10.25 / hour cash wages and $11.21 / hour including benefits (defined as life, health, dental    insurance plus profit sharing and retirement contributions)
• 51% of created jobs must go to “low-to-moderate income” people.
• Job creation requirements also exist, based upon the amount of assistance provided (generally 1 job per $5,000 in assistance)

• Up to $500,000 is available.
• Interest rates are negotiated
• Term is up to 20-years for real estate and 10-years for machinery & equipment.

Contact the Hutchinson Economic Development Authority at (320) 234-4223, or send an email, for additional information.

Small Business Development Loan Program

The Minnesota Agricultural and Economic Development Board (MAEDB) administers this loan program in order to promote the creation of jobs and assist business expansions in the state. The MAEDB issues industrial development bonds backed by a state-funded reserve of 25% and uses the proceeds to provide loans to businesses.

• Manufacturing and industrial businesses located or intending to locate in the state are eligible.
• The company must meet the Small Business Administration definition of a small business to be eligible under this program –
   generally firms with less then 500 employees meet this criterion.

• Project must create a “significant” number of new jobs.
• Funds can be used for land, buildings, machinery & equipment and project administration costs.
• Working capital and debt refinancing are not eligible.
• At least 20% of project costs must be privately financed through equity (25% is required for equipment)
• First position on real estate or equipment is required along with personal guarantees of the owners. Other security may be    required.
• Bond issuance costs of 4% are capitalized with the loan principle.
• 10% of the bond issue must be escrowed.

• Amounts from $500,000 to $6 million are available.
• Rates are fixed and are determined by the market rate for similar securities at the time the bonds are sold.
• Term is up to 20 years for real estate and 10 years for equipment, not to exceed 80% of its useful life.

For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

Rural Challenge Grant Program

The Rural Challenge Grant Program provides low interest loans to new or expanding businesses in order to provide job opportunities for low-income individuals, encourage private investment and promote economic development in greater Minnesota. The Southwest Initiative Foundation manages the program here in Hutchinson but the Minnesota Department of Trade and Economic Development provides final loan authorization.

• Businesses located or intending to locate in any of Minnesota’s 80 non-metro counties are eligible.
• Business start-ups or expansions are eligible.

• Projects must create or retain jobs for low income individuals.
• A financing gap must exist.
• Cash flow must be sufficient to cover the projected debt service.
• Funds can be used for property acquisition, site improvements, new construction, building renovation, machinery & equipment
  and working capital.
• Participation is limited to 50% of total project costs (each dollar must be matched by at least one dollar of non-public funds).

• Up to $100,000 is available, although loans to retail businesses are limited to $20,000.
• Rates range from 3% to 10%.
• Terms will be consistent with the other sources of project financing.

For additional information, contact the Hutchinson Economic Development Authority at (320) 234-4223, or send us an email.

At the Minnesota Department of Employment & Economic Development, contact Bart Bevins at 1-800-657-3858 or via email at bart.bevins@state.mn.us.

SMALL BUSINESS ADMINISTRATION

SBA 7(a) Loan Guaranty Program

The 7(a) Loan Guaranty Program is one of SBA's primary lending programs. It provides loans to small businesses that are unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders, which provide loans that are, in turn, guaranteed by the Small Business Administration. The SBA has no funds for direct lending or grants.

• Most types of businesses are eligible as long as they are for-profit and operate in the United States.
• The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast    majority of businesses meet this definition.

• Funds can be used for real estate, machinery & equipment, inventory and working capital.

• $2 million is the maximum loan available under the 7(a) program, although $1 million is the maximum exposure of the SBA
   under a guarantee.
• For loans of $150,000 or less, the SBA guarantees 85% of the loan
• For loans greater than $150,000, the SBA guarantee is 75%
• Interest rates may be fixed or variable and are negotiated between the lender and borrower subject to SBA guidelines, loan size    and the term of the loan:

• Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working
   capital (although under certain circumstance this can be stretched to 10 years).
• Guarantee fees apply based upon the size of the loan:

  • All loans are subject to a 25 basis point annualized servicing fee on the outstanding balance of the guaranteed portion of the
     loan.
  • Finally, there are penalties for pre-payment

Most lenders are familiar with SBA loan programs so interested applicants should contact their local lender for further information and assistance in the SBA loan application process.

SBA Express Loan Program

The SBA Express loan program is a simplified loan guarantee program that is essentially the same as its 7(a) loan program. The Express program is typically much faster and easier than the 7(a), however loan amounts cannot exceed $350,000. The SBA guarantees 50% of the loan and credit decisions are typically made within 36 hours.

• Most types of businesses are eligible as long as they are for-profit and operate in the United States.
• The firm must meet the SBA’s definition of a “small business,” which varies depending upon the type of business it is. The vast    majority of businesses have no trouble meeting this definition.

• Funds can be used for real estate, facility expansion or conversion, machinery & equipment, inventory & supplies, working capital,    to purchase an existing business and to refinance existing business debt that is not already structured with reasonable terms &    conditions.
• Loan proceeds cannot be used to effect a partial change of business ownership, to reimburse funds owned to an owner, to pay    delinquent taxes or for any unsound business purpose.

• Maximum loan amount is $350,000
• Interest rates are negotiated between the borrower and lender, may be fixed or variable, depend upon the size of the loan and    are tied to the prime rate.

• There is a 2% guaranty fee for loans up to $150,000 and a 3% guaranty fee for loans over that amount.
• Maximum terms are 25 years for real estate & equipment (limited to the economic life of the asset) and 7 years for working
   capital (although under certain circumstances this can be stretched to 10 years).
• Collateral may not be required for loans up to $25,000 – the bank making the actual loan makes this determination.

SBA Express loans are arranged through your local lender.