surviving the recession - brennan
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Surviving the Recession: Assistance for the Recycling Business Community
Carol C. Brennan, Director of Business Development, BDC Capital4/6/10
Loans & Investment Capital
for Business
At BDC Capital, our mission for over 55 years has been to provide innovative financing to growing companies in New England.
For permanent working capital, re-financing, machinery & equipment, real estate, and business acquisitions
When you need: Longer repayment term – to help with debt
service coverage Higher advance rates (100% financing) Reduction in leverage
BDC Capital www.bdcnewengland.com A private company - headquarters in Wakefield, MA•Funded by 28 banks (can work with any lender)•$300 million under management•Administers state programs (RLF, BRAC, CAP)
New England Certified www.newengland504.com An affiliate company•Our exclusive “Flexible Advantage” SBA 504 Loans•For fixed asset financing:
-real estate and machinery & equipment
About Us
Loan and Investment Solutions
Recycling Loan Fund (RLF) Loans: $50,000 - $500,000
BDC Term Loans: $500,000 - $3,000,000
BDC Mezzanine Investments: $750,000 - $5 million
New England Certified SBA 504 Loans: $400,000 project size and up
We work with your bank to provide the complete financing that a business needs to grow.
Recycling Loan Fund (RLF)
Loan program funded by Massachusetts DEP Flexible terms to help businesses involved in any
recycling activity which keeps non-hazardous materials out of Massachusetts landfills
Supplements bank financing For solid waste recyclers OR companies that use
recycled materials in their process (e.g. a molder that uses recycled resin)
Typical loans range from $50,000 to $300,000; up to 10 year term; fixed rates negotiated
Quick turnaround time
Since 1995, the start of the RLF program 15 years ago: Provided 40 “Recycling Loan Fund” loans to assist a diverse group of recycling businesses
throughout the Commonwealth. We have funded over $8 million of loans,
more than double the $4 million of state funds that capitalized the program.
These loans have helped to raise $24 million in private sector financing – and created and/or retained over 900 jobs
RLF Past Borrowers:
DW Clark Manufacturer of metal castings $300,000 term loan for debt refinance and working
capital
Dover Trucking, Inc. Waste removal and recycling $240,000 term loan for debt refinance and
equipment
Agresource, Inc. Organic composting business $130,000 term loan for equipment
RLF: Low Interest Rate Program for Management of Food Waste
Loans for activities involving food waste can receive up to $500,000 at a rate as low as 4% fixed
Up to 10 year term For any reasonable business purpose! Examples of eligible types of customers:
1) generators of food waste - totes for recycling 2) haulers - equipment to move the food waste3) composters - equipment to make compost from food waste
Term loans: $500,000 to $3,000,000 With or without an SBA 7(a) guarantee
(BDC Capital is an SBA preferred lender)
In a senior or junior secured position or in a participation loan with a lender
March 2010 rates as low as 5.48%
BDC Term Loans
BDC Term Loans
Example of Borrower Needs:
•Additional working capital needs: BDC to refinance portion of line of credit into 7(a) term loan – took 2nd position on assets
•Refinance existing term debt to free up cash flow for real estate acquisition
•Business acquisition – participation loan with bank and SBA 7(a) guarantee
• For owner-occupied real estate and M&E:
• Borrower conserves working capital: 10% down payment (vs. 20% conventionally)
• Bank has 50% loan-to-value 1st mortgage
• SBA funds 40% share (through New England Certifed) -with low, 20-year fixed rate: 6.06%
in March 2010
SBA 504 “Flexible Advantage” Loansthrough New England Certified Development Corp. (CDC)
Under “The Economic Stimulus” Plan, SBA has waived two fees:
CDC Processing Fee on SBA’s Share (1.5%)
SBA Guarantee Fee on Bank Share (0.5%)
SBA 504 “Flexible Advantage” Loansthrough New England Certified Development Corp. (CDC)
3nd Mezzanine Fund – Raised $28 million• For acquisitions, leveraged buyouts,
management buyouts • For healthy, growing companies looking
for “growth capital” - equity base too thin
Companies with:• Solid management• Strong cash flows (usually limited
collateral)• Barriers to entry
BDC Mezzanine Investments
•Investment size: $750,000 to $5,000,000
•A market rate of interest (12%); 5 year term
•Plus either :- a royalty fee tied to sales (tax deductible)
- or a warrant•Don't give up ownership / control •Don’t require personal guarantees•Less dilutive than equity•Can fill the “collateral gap”
BDC Mezzanine Investments
CONTACT US: 781-928-1100
BDC Capital500 Edgewater Drive, Suite 555 781-928-1100 Wakefield, MA 01088 781-028-1101 fax
LOAN OFFICER: Karen Michalski, VP, 781-928-1107
BUSINESS DEVELOPMENT OFFICERS: Carol Brennan (Central & WMass.) cell 413-237-6648
Nancy Gibeau (South & SE Mass.) cell 508-254-7891 [email protected]
John Figmic (Eastern Mass.) 781-928-1122 [email protected]