1

Self-Help Ventures Fund

SBA 504 Loan ProgramOverview August 2012

2

About Self Help

• Non-profit Community Development Financial Institution founded in 1980

• Mission: Creating and protecting ownership and economic opportunity for all, especially people of color, women, rural residents and low-wealth families and communities.

3

Programs

• Home loans• Small business & non-profit loans• Community development &

neighborhood revitalization • Nationwide advocacy

4

504 Loan Program

US Small Business Administration

Certified Development Company (CDC)

5

504 Program Goal

Foster economic development and job creation

by supporting small business growth

6

How do we do that?

7

?

Are small businesses facing challenges in accessing capital to finance facilities and equipment in today’s market?

8

How do we do that?

9

By partnering with traditional commercial lenders to make loans

Providing:

•Long-term financing for business expansion

•Encourage small businesses to make new capital investments

10

SHVF / SBA

$800,00040%

Borrower $200,000 10%

+5% startup+5% special purpose

11

504 Loan: Typical Financing Structure

FUNDINGSOURCE

PROJECTCOSTS

LIENPOSITION

LOANTERM

RATE

Commercial

Lender

50% 1st 10 Yr7 Yr (M&E)

Variable or fixed

SBA/SHVF 40% 2nd 20 Yr10 Yr (M&E)

Fixed

Borrower 10%

12

What kinds of businesses use 504 loans?

13

• For Profit Business

• Meets SBA definition of “small”

• Wants to limit capital contribution to fixed assets

• In a position to grow, or restructure existing borrowing

• Financing Real Estate or Durable Equipment

14

Local 504 Borrowers

15

Local 504 Borrowers

16

Local 504 Borrowers

17

Local 504 Borrowers

18

Local 504 Borrowers

19

Local 504 Borrowers

20

Why do businesses use 504 loans?

21

Appeal for Small Businesses

• Access to capital

• Up to 90% financing/Low down payment (10%)

• Long-Term, Fixed-Rate (40%) on 504 loan

• More capital to fund growth

• Finance soft-costs

22

Appeal for Lending Partners

• 50% LTV, 1st lien on project assets (limited risk)

• Competitive edge: Competitive/Creative approach to attract and retain new clients

• Preserve customers and strengthen relationships

• Stronger cash flow for clients

• Participate in deals not meeting all of bank’s criteria

23

Appeal for Community

• Foster Business Growth

• Job Creation and Retention

• Local Economic Stability

• Tax Base

24

Contact UsDon’t Hesitate to call or email, its why we

are here

•Charlie Cleary (919) 956-4629

•Charlie.cleary@self-help.org

•www.self-help.org/504loans

25

?