Mainebiz

W W W. M A I N E B I Z . B I Z 33 FA C T BO O K / D O I N G B U S I N E S S I N M A I N E B U S I N E S S R E S O U R C E S At Verrill Dana, we understand that in every controversy or transaction, you're counting on us. We have the resources to provide outstanding legal support across a broad range of practice areas and industries. Yet we're agile enough to respond quickly to your needs. We' ll be there when you need us. It's better to work with a partner. Portland, ME | Augusta, ME | Boston, MA | Westport, CT | Providence, RI | Washington, DC | www.verrilldana.com residential or commercial property. Loan maturity is generally three years but can be extended up to five years, if necessary, to facilitate sale of the property. Proceeds are used solely for direct expenses of acquisi- tion, immediate construction and/or significant rehabilitation of the resi- dential or commercial structures. e purchase of the land can be included if it does not exceed 20% of the loan proceeds. Up to 5% of the proceeds can be used for physical improve- ments that benefit the property. 4. The Working Capital Line Program is a revolving line of credit (up to $5 million) that provides short term working capital. ese lines are generally used by businesses that provide credit to their customers, or whose principle asset is inven- tory. Disbursements are generally based on the size of a borrower's accounts receivable and/or inven- tory. Repayment comes from the collection of accounts receivable or sale of inventory. e specific structure is negotiated with the lender. ere may be extra servic- ing and monitoring of the collater- al for which the lender can charge up to 2% annually to the borrower. Company loan program (504 loans) e 504 Loan program is an eco- nomic development program that supports American small busi- ness growth and helps communi- ties through business expansion and job creation. e 504 loan program provides long-term, fixed-rate, subordinate mortgage financing for acquisition and/or renovation of capital assets including land, build- ings and equipment. Some refinanc- ing is also permitted. Most for-profit small businesses are eligible for this program. e types of businesses excluded from 7(a) loans are also ex- cluded from the 504 loan program. e SBA's 504 Certified Development Companies (CDC) serve their com- munities by financing business expan- sion needs. eir professional staff works directly with borrowers to tailor a financing package that meets pro- gram guidelines and the credit capac- ity of the borrower's business. CDCs work with banks and other lenders to make loans in first position on reasonable terms, helping lenders retain growing customers and provide Community Reinvestment Act credit. Program additions based on energy consumption Recent additions to the program allow $5.5 million for each project that re- duces the borrower's energy consump- tion by at least 10%; and $5.5 million for each project that generates renewable energy fuels, such as biodiesel or etha- nol production. Projects eligible for up to $5.5 million under one of these two requirements do not have to meet the job creation or retention requirement, so long as the CDC portfolio reflects an average jobs to debenture portfolio ratio of at least one job per $65,000. Eligible project costs are limited to long-term, fixed assets such as land and building (occupied by the bor- rower) and substantial machinery and equipment. Most borrowers are required to make an injection (borrower con- tribution) of just 10% which allows the business to conserve valuable operating capital. A further injec- tion of 5% is needed if the business is a start-up or new (less than two years old), and a further injection of 5% is also required if the primary collateral will be a single-purpose building (such as a hotel). Businesses that receive 504 loans are: Small: net worth under $15 million, net profit after taxes under $5 million Organized for-profit Most types of business, including retail, service, wholesale or manufacturing. The SBA 504 loan is distinguished from the SBA 7(a) loan program in these ways. The maximum deben- ture, or long-term loan, is: $5 million for businesses that create a certain number of jobs or improve the local economy $5 million for businesses that meet a specific public policy goal, including loans for aiding rural development and expansion of small businesses owned by veterans, women, and minorities $5.5 million for manufacturers and energy related public policy projects.

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