Download - Capital Access Corporation Kentucky
Capital Access Corporation Kentucky
SBA 504 Loan Program
US Small Business Administration
• 504 Loan Program
• Fixed Interest Rates
• 10 or 20 year term
• 10% Borrower equity
Purpose of 504 Program
• Assist healthy & growing small businesses by participating with lending institutions to provide fixed-rate, long-term financing of fixed assets.
• To provide long term fixed-asset financing to eligible and healthy small businesses at a reasonable rate.
Accessing the SBA 504 Loan Program
• Capital Access Corporation – Kentucky will provide access to the SBA 504 Loan Program.
• Our geographic territory consists of; Statewide
Eligible Businesses
• Project located in our territory• Business must be for profit• Business net worth less than $7 million• Average income for the last two years
cannot exceed $2.5 million• Initial owner occupancy standard: 51% for
existing building, 67% for new construction
Eligible Projects
Fixed assets such as• Land and new building construction• Existing building purchase• Building renovation• Machinery and Equipment
Project Size
• Project (Amount)
• CAC – Ky. (Amount)
• Minimum Maximum
• $120,000 Unlimited
• $50,000 $1,500,000*
*If a policy goal of SBA is met, CAC – Ky. Loan can be $2,000,000
SBA Public Policy Goals
• Rural Development • Business District Revitalization• Expansion of Exports• Minority Business Development• Woman Owned Business (51%)• Veteran Owned Business (51%)
Typical 504 Project
Fixed AssetLender(7 or 10 year minimum term)
CAC – Ky.(10 or 20 year fixed rate)
BorrowerTotal Project
$1,000,00050% $500,000
40% $400,000
10% $100,000100% $1,000,000
Lender Loan
• If CAC – Ky.’s loan is 20 years, the bank loan must be at least a 10 year term. Real Estate Loans.
• If CAC – Ky.’s loan is 10 years, the bank loan must be at least a 7 year term. Equipment Loans.
• Rate negotiation are between bank and customer.
• Balloon payments are allowed
Advantages to Lending Institution
• 1st Mortgage on property financed• 50% loan to value• Improved cash flow• CRA Credit• Capital Access Corp – Ky. Works directly
with the client
Advantages to Borrower
• Conserve working capital – 10% down payment• Offset interest rate risk – 40% of project tied to
fixed rate• Extended amortization provides lower monthly
payment• Improved collateral position for bank often results
in more lending capacity for other needs and lower rates
Rates
• Established at the time of the bond sale, after the project is complete
• Typically lower than conventional
• Fixed for the life of the loan!
Predefined Prepayment Penalty
• Effective for first half of the loan• For a 20 year note, starts at the note rate in the
first year and decreases 10% a year for 10 years• For a 10 year note, starts at the note rate in the
first year and decreases 20% a year for 5 years• Company incurs no penalty if prepays loan in: - year 11 of a 20 year bond - year 6 of a 10 year bond
Additional Program Specifics
• Personal resource test implemented• Single purpose facilities required additional
5% equity injection• Start-up businesses require an additional
5% equity injection• Job Creation standard of 1 job created for
every $50,000 Capital Access Corp – Ky. Lends must be met
For More Information Call:
Capital Access Corporation-Kentucky
120 Webster Street, Suite 330Louisville, Ky. 40206
(502) 584-2175