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16 Worcester Business Development Corporation • 1965 - 2015 DID YOU KNOW THAT THE WBDC… • offers a loan program designed to help business owners grow and sustain their companies? • has funded loans in excess of $53 million to more than 106 businesses? • has been an authorized Certified Development Corporation (CDC) since 1981? What exactly is an SBA 504 loan? It's a fixed rate, long-term financing program that promotes economic development within a community. The loan can be used to purchase land and buildings, for new construction, renovations, leasehold improvements, acquisition of machinery and equipment and refinancing existing debt. What can't SBA Loan funds be used for? Small businesses that get an SBA 504 loan may not use the funds as working capital, to pay franchise fees, to increase business inventory or to make tenant improvements for unrelated tenants. How do you qualify for an SBA 504 loan? Small businesses have to meet SBA 504 size standards; operate for profit; have a tangible net worth of $15 million or less; have an average net profit of less than $5 million over the last two fiscal years; create or retain jobs that improve the local economy; and meet a public policy or community development goal (e.g., minority, veteran, woman-owned business). How does the SBA 504 program work? The borrower obtains a first mortgage loan for 50% of the project from a bank; WBDC provides a secondary loan (debenture) for the next 40% (usually), with a maximum loan size of $5.5 million, meaning the borrower only provides 10% equity for the project. How does the borrower benefit? The low down payment preserves the small business's working capital, which can then be reinvested. The borrower may also work with any lender of choice. Low fixed interest rates mean no unexpected payment changes and mortgage style amortization protects against fluctuations in real estate valuations. Additionally, the borrower can purchase and hold title to the property to maximize tax benefits of ownership. Finally, eligible soft costs may be rolled into project financing. SBA504 Loan Program: Growing and Sustaining Small Business "WBDC has been an important consistent partner of the Small Business Administration for many, many years now and actually goes back to 1981. In addition to helping to deliver badly needed capital to Worcester County small businesses through the SBA 504 program, SBA and WBDC have partnered on numerous events such as SBA's MA Small Business Week awards and most recently the Build Northeast conference. From all of us at the MA SBA, congratulations to the WBDC team on 50 years of service to the small business community! " Robert Nelson District Director MA SBA