On the opposite end of the loan-size spectrum is the 504
Certified Development Company (CDC) Program. Fixed-rate loans for
long-term fixed assets, usually real estate and equipment, 504s are
used most often for growth and expansion. A CDC is a nonprofit
intermediary that works with the SBA, banks and businesses looking
for financing. There are CDCs throughout the country, each covering
an assigned region. If you're seeking funds to buy or renovate
a building or put in some major equipment, consider bringing your
business plan and financial statements to a CDC. Typical
percentages for this type of package are 50 percent financed by the
bank, 40 percent by the CDC and 10 percent by the business.
In exchange for this below-market, fixed-rate financing, the SBA
expects the small business to create or retain jobs or to meet
certain public policy goals. Businesses that meet these policy
goals are those whose expansion will contribute to a business
district revitalization, such as an Enterprise Zone; a
minority-owned business; an export or manufacturing company; or a
company whose expansion will contribute to rural development.
Additional public policy goals are the promotion of enhanced
economic competition, including the advancement of technology,
which covers plant retooling or modernization, and even conversion
to robotics. Other categories of companies that qualify are those
that compete with imports and those affected by cutbacks in defense
spending or by military base closures.
"With any start-up, lenders are looking for an experienced
principal to run the company," says Jacklyn Jordan, president
of the California Bay Area CDC Capital Access Group. "They
want experience in that industry or closely related experience that
would apply to running that type of business."
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