Long-term Fixed Asset Financing

Long-term Fixed Asset Financing

SBA 504 Loans

Retailers, as well as manufacturers, are eligible for loans through the SBA 504 Loan Program. Self Help is the registered agent for processing 504 loans in Pitt County. This program provides 90% fixed asset financing for 10 to 20 years on land, buildings, and equipment, as well as leasehold improvements to existing structures if the property is controlled for at least 10 years.

Qualifying companies must be small businesses with net worth less than $7.5 million and net profits less than $2.5 million. Overall project size is generally limited to amounts randing from $125,000 to $10 million. Rates are fixed, but tied to Treasury Bond rates at closing.

SBA will finance up to 40% (or $1.5 million for standard loans; $4 million for manufacturing) on fixed assets with the remaining 60% from equity and a commercial lender. Companies must provide at least 10% of the eligible project costs, 15% if the small business has been in operation for 2 years or less or if the project being financed involves a limited or single purpose building or structure, or 20% if both of the above conditions apply. Typically, companies must provide one job for every $65,000 of SBA funds borrowed. For further information contact the Self Help office at 252-752-8866.

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Lease Package

The Pitt County Development Commission maintains a list of local investors capable of constructing facilities to the specifications of credit worthy companies on a lease-back basis. Multimillion dollar facilities can be constructed under favorable terms and conditions. Larger capital requirements (which include funds for machinery and equipment) can be satisfied via contacts with national companies.

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Industrial Revenue Bonds

The Pitt County Industrial Facilities and Pollution Control Financing Authority was established to provide low cost, long-term, fixed asset financing for qualified industrial projects. A qualifying project usually is any manufacturing, processing, or assembly operation in the company creates or retains one job for every $250,000 in financing. The interest rate is variable, floating at a rate typically around 70-80% of prime rate, and the term may extend up to 20 years. The minimum amount for a single issue to be cost effective is $1.5 – $2 million. Smaller issue amounts, as low as $750,000, may be financed through participation in the North Carolina Bond Pool.

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USDA Rural Development Loans

The USDA’s business and industry program provides for direct loans for expansions and preservation of jobs in rural areas. These loans are made to individuals or corporate businesses to support business activity in rural areas with populations up to 50,000. Loan funds may be used to purchase land, buildings and equipment; working capital; and refinance debts. The goal of the program is to strengthen the economy of rural communities through the creation of employment opportunities.

The program also provides loan guarantees for expansion and preservation of jobs in rural areas. The guarantees are issued to commercial lenders who make credit available to support business activity in rural areas with populations up to 50,000. Loan funds may be used to purchase land, buildings and equipment; working capital; and refinance debts.

For more information visit their website at www.rurdev.usda.gov/nc/.

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