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V O L . X X I I N O. X V 38 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 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 communities by financ- ing business expansion needs. eir professional staff works directly with borrowers to tailor a financing pack- age that meets program guidelines and the credit capacity of the bor- rower's business. CDCs work with banks and other lenders to make loans in first position on reasonable terms, help- ing lenders retain growing cus- tomers 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 reduces the borrower's energy consumption by at least 10%; and $5.5 million for each project that generates renewable energy fuels, such as biodiesel or ethanol produc- tion. Projects eligible for up to $5.5 million under one of these two re- quirements do not have to meet the job creation or retention require- ment, 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). Two-tiered project financing: A lender finances approximately 50% of the project cost and receives a first lien on the project assets (but no SBA guaranty); A CDC (backed by a 100% SBA-guaranteed deben- ture) finances up to 40% of the proj- ect costs secured with a junior lien. e borrower provides the balance of the project costs. Fixed interest rate on SBA loan. e SBA guarantees the debenture 100%. All project-related costs can be financed, including acquisition (land and building, land and con- struction of building, renovations, machinery and equipment) and soft costs, such as title insurance and appraisals. Some closing costs may be financed. Collateral is typically a subordi- nate lien on the assets financed; allows other assets to be free of liens and available to secure other needed financing. Long-term real estate loans are up to 20-year term, heavy equip- ment 10- or 20-year term and are self-amortizing. Key business resources in Maine U.S. Small Business Administration Maine District Office 68 Sewall St. Edmund S. Muskie Federal Bldg., Rm. 512 Augusta, ME 04330 207-622-8551 www.sba.gov/me Eastern Maine Development Corp. 40 Harlow St. Bangor, ME 04401-5102 207-942-6389 or 800-339-6389 Maine Only 207-942-3548 Fax www.emdc.org CEI 30 Federal St., Ste. 100 Brunswick, ME 04011 207-504-5900 www.ceimaine.org Microloan program Entrepreneurs and small business owners interested in small amounts of business financing (up to $50,000) should contact the nearest SBA district office for information about the nearest Microloan Program Intermediary Lender or go to www.sba.gov/microloans e Microloan program provides very small loans (up to $50,000) to women, low-income, minority, veter- ans and other small business owners through a network of more than 100 intermediaries nationwide. Under this program, the SBA makes funds available to nonprofit intermediar- ies that, in turn, make the small loans directly to start-up and existing busi- nesses. Entrepreneurs work directly with the Intermediaries to receive financing, and business knowledge support. e proceeds of a microloan can be used for working capital, or the purchase of furniture, fixtures, supplies, materials, and/or equipment. Microloans may not be used for the purchase of real estate. Interest rates are negotiated between the borrower and the Intermediary. e maximum term for a microloan is six years. Because funds are borrowed from the Intermediary, SBA is not involved in the business loan application or approval process. And, payments are made directly from the small business to the Intermediary. e program also provides business-based training and techni- cal assistance to micro-borrowers and potential micro-borrowers to help them successfully start or grow their businesses. Such train- ing and technical assistance may include general business education, assistance with business planning, industry-specific training, and other types of training support. Miscellaneous programs Androscoggin Valley Council of Governments 125 Manley Rd. Auburn, ME 04210 207-783-9186 • 207-783-5211 Fax www.avcog.org Community Concepts, Inc. 17-19 Market Sq./P.O. Box 278 South Paris, ME 04281 207-743-7716 or 800-866-5588 www.community-concepts.org CEI 30 Federal St., Ste. 100 Brunswick, ME 04011 207-504-5900 cei@ceimaine.org www.ceimaine.org MaineStream Finance 262 Harlow St./P.O. Box 1162 Bangor, ME 04402-1162 207-973-3500 or 800-215-4942 www.mainestreamfinance.org Northern Maine Development Commission 11 W. Presque Isle Rd./P.O. Box 779 Caribou, ME 04736 207-498-8736 or 800-427-8736 www.nmdc.org Export Working Capital Program e SBA's Export Working Capital Program (EWCP) assists businesses exporters in meeting their short- term export working capital needs. Exporters can use the proceeds to make the products they will be export- ing. ey can also apply for such lines of credit prior to finalizing an export sale or contract. With an approved EWCP loan in place, exporters have greater flexibility in negotiating export payment terms — secure in the assur- ance that adequate financing will be in place when the export order is won. Application is made directly to SBA-participating lenders. Businesses are encouraged to contact SBA staff 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.