1. SMALL BUSINESS FINANCING AND ASSISTANCE
SERVICE EXPERTISE EXPERIENCE DEPENDIBILITY

2. Background on SEED ESTABLISHMENT PURPOSE
In 1982, SEED was established as a non-profit
corporation and approved by the SBA as a Certified Development Company (CDC) under the SBA Program.
PURPOSE
SEED’s mandate is to assist small businesses to start-up, expand and create new jobs.
Over the last 34 years, SEED has focused on providing gap financing and technical assistance for small businesses.

3. SBA 504 Program: All of Massachusetts and Rhode Island (except Washington County)
Geographic Coverage
Small Loan Program: Barnstable, Bristol, Dukes, Middlesex, Nantucket, Norfolk, Plymouth and Suffolk counties in Massachusetts and all of Rhode Island.

4. Loan Programs Currently, SEED administers three loan programs:
SBA 504 Loan Program – Loans up to $5.5 million for real estate and heavy machinery and equipment.
Small Loan Program – Loans up to $250,000, usually as part of a larger project, with flexible use of funds.
Micro Loan Program – Loans up to $50,000, flexible use of funds.

5. Loan Programs (continued)
SEED’s loan programs are designed to work in conjunction with the financial institutions in the region.
As a “gap financier” SEED makes loans which fill a financing gap– A micro loan up to $50,000 when a small business is not
yet “bankable” or a larger loan when the bank cannot provide the entire financing needed.
SEED’s credit, cash flow and collateral ratios are more flexible, and SEED provides Technical Assistance.

6. Technical Assistance
SEED also provides technical assistance to prospective
and existing small business entrepreneurs through:
Individual sessions;
Monthly entrepreneurial workshops; and
A small business library.

7. Benefits to the Borrower:
SBA 504 Loan Program
Benefits to the Borrower:
Financing for a fixed asset project with as little as a 10%
injection;
Long-term, fixed rate funds…enhancing cash flow for
business;
SEED’s interest rate as of February 2017 is:
% on a 20-year debenture
% on a 10-year debenture
Ability to include soft costs, equipment and furniture and
fixtures in a real estate project…enabling businesses to
minimize out of pocket expenses and preserve cash;
Lower down payment conserves working capital.

8. SBA 504 Loan Program Benefits to the Bank:
Bank’s maximum loan-to-value is typically 50%, minimizing risk and improving liquidity;
Ability to provide 90% financing to a small business client;
Program allows reliance on financial projections – for startups and businesses with inadequate historic cash flow;
The bank’s first mortgage can be sold in the secondary market for a premium;
The CDC is responsible for all of the paperwork!!

9. SBA 504 Loan Program (continued)
SBA 504 PROGRAM (Continued)
SEED requires no application form
SEED offers a first time lender incentive
Competitive rates and fees
Abridged Submission Method Lender ensuring efficient SBA approval process
SBA 504 Loan Program (continued)

10. Structure of a Typical $1 Million Project
Loan % of
Entity Amount Project Security
Lender $500, % 1st Mortgage
SEED/SBA $400,000 % 2nd Mortgage
Borrower $100, %*
TOTAL: $1,000, %
 Total Debenture: $409,000 ($8,600 rounded up)
(Up front fees of 2.15% on $400,000; included in the debenture)
* Projects that involve a new business and/or special purpose building will require
an additional 5-10% from the borrower.

11. Rate the borrower actually pays
Effective Rate
Rate the borrower actually pays
Note rate (as of 02/17 Sale – 20 yrs) %
Plus Fees:
Annual Central Servicing Agent Fee %
CDC Servicing Fee (SEED SBA .125)  1.000%
SBA Fee %
Total Fees %
SEED’s Interest Rate (As of 02/17) %
 SBA Required Servicing Fee – This fee can go up to 1.5%. CDC’s Servicing Fees vary and impact the client’s effective rate!

12. Fees Charged by the CDC
Financed as part of 504 loan – 2.15% of net debenture
CDC Processing Fee: %
SBA Guarantee Fee: % Paid to SBA- one time fee 
Underwriting Fee: %
Covers expense of pooling & underwriting 504 debenture,
paid directly to Merrill Lynch
Funding Fee: %
Paid to Central Servicing Agent (Wells Fargo)
Total: 2.15%
 Effective 10/1/15, the SBA Guarantee fee has gone to zero from 0.50%!

13. Use of Funds Ineligible uses of funds:
Fixed-Asset Acquisition or Expansion Including:
Purchase land & construction of new buildings
Purchase and/or renovate existing buildings
Acquire/Install machinery & equipment
Refinance existing fixed asset debt up to 50% of new SBA 504 Project
Direct refinance under new guidelines as of 6/24/16!
Soft costs related to the project (appraisal, environmental, interim interest, other)
Ineligible uses of funds:
Purchase of trucks and autos
Working Capital/Inventory
Franchise fees

14. Bank’s First Mortgage * Ask us about our first-time lender incentive!
Permanent financing must be for at least 10 years –
(on a 20-year debenture) with no balloon payments
during that time.
Interest rate on the bank’s mortgage is set by bank.
Bank can charge points.
One-time fee of 0.50% on the bank’s first mortgage is
charged by the SBA. *
* Ask us about our first-time lender incentive!

15. Other Requirements Occupancy: Jobs:
Business must occupy at least 51%
Business must initially occupy at least 60% of a newly constructed building and 80% within 10 years
Jobs:
Create/Retain one job for each $65,000 borrowed through the 504 Program unless the project meets a Public Policy Goal
Manufacturing Businesses- one job per $100,000

16. SBA Debt Refinance Program (Returned 6/24/2016)
Eligible Debt
Secured by fixed assets and be in place at least two years;
Borrower must have been in business two years and 85% of the loan must have been for Real Estate or Equipment;
Any debt being refinanced must have been current for the last 12 months.
Eligible Costs
Owner-occupied commercial real estate or equipment (not Federal debt);
Other debt secured by the same assets (i.e. line of credit);
Closing Expenses;
Eligible business expenses that do NOT exceed 25% of the value of the assets, including utility bills, rent, salaries, inventory, etc.

17. SBA Debt Refinance Program (Continued)
--Loan-to-Value (LTV)
Loan-to-Value (LTV)
LTV of 90% for commercial mortgage and other debt only (additional collateral may be pledged to achieve 90%);
LTV of 85% when eligible business expenses are included (eligible business expenses are limited to 25% of the value of the fixed asset; additional assets CANNOT be used to increase the amount of the “cash out”).
Fees/Costs
All regular 504 costs apply and are financed in the 504 loan;
Third Party Lender fee of 0.5% still applies;
The ongoing fee is slightly higher (0.797% vs %) which has a minor (0.10%) impact on the effective rate.

18. Why YOU Should Consider a SEED/SBA 504 Loan
Up to 90% financing for 504 projects;
Lower down payment for client; improved liquidity for bank;
SEED provides quick & efficient turn around (SBA approved for the Abridged Submission Method);
Note is assumable by another borrower;
SEED offers a low 504 rate; provides loans up to $200,000 at 5% fixed to assist with working capital or replace the down payment;
SEED is responsible for all the paperwork; No application form to fill out.

19. Small Loan Program Start-Up and Existing Businesses
Loans up to $250,000;
Use of Funds: working capital; equipment; real estate; furniture and fixtures;
5- 6% Fixed - depending on bank/credit union participation;
Up to 10 years with amortizations up to 20 years;
No prepayment penalty.
Administered with State and Federal Grants, SEED Funds,
CDFI Funds, RI and MA Funds.

20. Start-Up and Existing Businesses
Micro Loan Program
Start-Up and Existing Businesses
Loans from $1,000 - $50,000;
Use of funds: working capital; leasehold improvements; machinery and equipment; furniture and fixtures; inventory; and refinancing of business credit card debt;
6% Fixed; up to 6 Year Term;
No prepayment penalty;
Start-Up Businesses - require secondary source of income.

21. Eligibility for Small Loan and Micro Loan Programs
Personal Credit: 600+ (Bankruptcy must be discharged for 5+ years);
Cash Flow: Global- all personal and business income and expenses are considered;
Collateral:
Real Estate (Junior position on personal and/or commercial property);
Business Assets/Equipment (if available);
Unsecured up to $10,000 if no collateral is available;
7(A) Guaranty.

22. South Eastern Economic Development Corporation
Your SEED/SBA Experts
Laurie Driscoll
(508) x 316
Lisa Holmes
(508) x 315
Angela Laperriere
(508) x 312
Liz Voss
(508) x 330
South Eastern Economic Development Corporation
80 Dean Street, Taunton, MA 02780