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