Long-term Fixed Asset Financing
SBA 504 Loans
Retail and service businesses, as well as small manufacturers, are eligible for loans through the SBA 504 Loan Program. Self Help, the largest certified development company in North Carolina, is the registered agent for processing 504 loans in Pitt County. The SBA 504 Loan Program supplies permanent long-term financing for land, building acquisitions, construction, and equipment purchases. Loan repayment terms are 20 years for real estate and 10 years for machinery and equipment.
Qualifying companies must be for-profit small businesses with net worth less than $15 million and average net income of $5 million or less after federal income taxes for the preceding two years prior to application. Rates are fixed, but tied to Treasury securities rates at closing.
SBA will finance up to 40% (a maximum of $5 million for standard loans; $5.5 million for small manufacturers) 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 (one job for every $100,000 for small manufacturers). For further information contact the Self Help office at 252-752-8866 or www.self-help.org
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.
Industrial Revenue Bonds
The Pitt County Industrial Facilities and Pollution Control Financing Authority was established to assist in providing low cost, long-term, fixed asset financing for qualified industrial projects. A qualifying project usually is any manufacturing, fabricating, processing, or assembly operation in which the company creates or retains one job for every $250,000 in financing. The interest rate may be variable or fixed, 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. For more info on Revenue Bonds, visit www.nccommerce.com
USDA Rural Development Loans
The USDA’s business and industry program 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; for working capital; and to refinance debts. The goal of the program is to strengthen the economy of rural communities through the creation of employment opportunities.
For more information visit their website at www.rurdev.usda.gov/nc/.