FUNCTION: Provides
short-term loans of up to $35,000 to small businesses and not-for-profit
child-care centers for working capital or the purchase of inventory,
supplies, furniture, fixtures, machinery and/or equipment. Proceeds
cannot be used to pay existing debts or to purchase real estate.
The SBA makes or guarantees a loan to an intermediary, who in turn,
makes the microloan to the applicant. These organizations also provide
management and technical assistance. The loans are not guaranteed
by the SBA. The microloan program is available in selected locations
in most states.
CUSTOMER: Small businesses and not-for-profit child-care centers
needing small-scale financing and technical assistance for start-up
or expansion.
DELIVERED THROUGH: Specially designated intermediary lenders
(nonprofit organizations with experience in lending and in technical
assistance).
www.sba.gov/financing/frmicro.html
PROGRAM: Certified Development Company (CDC), a 504 Loan Program
FUNCTION: Provides long-term, fixed-rate financing to small
businesses to acquire real estate or machinery or equipment for
expansion or modernization. Typically a 504 project includes a loan
secured from a private-sector lender with a senior lien, a loan
secured from a CDC (funded by a 100 percent SBA-guaranteed debenture)
with a junior lien covering up to 40 percent of the total cost,
and a contribution of at least 10 percent equity from the borrower.
The maximum SBA debenture generally is $1 million (and up to $1.3
million in some cases).
CUSTOMER: Small businesses requiring -brick and mortar- financing.
DELIVERED THROUGH: Certified development companies (private, nonprofit corporations set up to contribute to the economic development of
their communities or regions)
www.sba.gov/financing/frcdc504.html
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