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Capital Access Corporation-Kentucky. SBA 504 Loan Program Presented by: Will Fensterer, Vice President-Business Development. US Small Business Administration. 504 Loan Program Fixed Interest Rates 10 or 20 year term 10% Borrower equity. Purpose of 504 Program.
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Capital Access Corporation-Kentucky SBA 504 Loan Program Presented by:Will Fensterer, Vice President-Business Development
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 low interest, fixed-rate, long-term financing for fixed assets.
Accessing the SBA 504 Loan Program Capital Access Corporation – Kentucky will provide access to the SBA 504 Loan Program. Our geographic territory consists of; The entire Commonwealth of Kentucky, as well as the Southern Indiana counties of: Washington, Floyd, Clark and Harrison
Eligible Businesses Project located in our territory Business must be for profit Business net worth less than $7.5 million Net income for the last two years cannot exceed $2.5 million Initial owner occupancy standard: 51% for existing building, 60% for new construction
Project Size Project (Amount) CAC – Ky. (Amount) MinimumMaximum $120,000 Unlimited $50,000 $1,500,000* *If a policy goal of SBA is met, CAC – Ky. Loan can be $2,000,000 • *Manufacturers are entitled up to $4,000,000
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 Asset Lender (7 or 10 year minimum term) CAC – Ky. (10 or 20 year fixed rate) Borrower Total Project $1,000,000 50% $500,000 40% $400,000 10% $100,000 100% $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 #1 Riverfront Plaza 401 West Main Street, Suite 2010 Louisville, Ky. 40202 (502) 584.2175 Toll Free: 1.888.858.8019
