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Agricultural
Financing & Debt Stabilization
In addition to loans for manufacturing, processing and related businesses, VEDA provides loans and refinancing for family farms or agricultural facility operators. Eligible borrowers can use such funds for the acquisition of real estate or equipment.
Fixed asset loans can be made for up to $500,000 and the limit for operating loans is $300,000. Rates change periodically based on "VACC Prime" which generally mirrors national prime.. VACC prime may not change on exactly the same day as national prime (generally on the first of the month following change in national prime).
Rates:
Variable: 0.50% below VACC Prime adjusted on the first of the month following a change in the index. Rate is subsidized for a period not to exceed 5 years, then reverts to VACC Prime + .50%
Fixed: Determined at time of closing.
Montpelier, VT 05602-3044
- Founded in 1995, the mission of the Central Vermont Revolving
Loan Fund (CVRLF) is to contribute to a strong Central Vermont
community by helping small businesses prosper through the provision
of flexible financing and ongoing technical assistance. CVRLF
serves those entrepreneurs who have difficulty obtaining full
financing from a conventional bank. In particular, we strive
to promote economic opportunity and financial security for Central
Vermonters by targeting resources to those businesses that are
owned by or employ low or moderate income individuals in our
community. We specialize in providing high-touch lending and
ongoing technical support to new and budding entrepreneurs.
Small Business Loans Our primary product is an amortizing loan of up to $50,000 per Borrower. Loan funds can be used for working capital, equipment purchases and upgrades, real estate acquisition, and refinance of debt in some cases. Loans are made available through a selective application process requiring a business plan, financial projections, and other documentation. Applicants are referred to area business counselors for support in developing their application and business plan. The CVRLF also offers a working capital line of credit and an incremental microcredit program called Steps To Success funded through a USDA Rural Business Enterprise Grant (RBEG). Technical Assistance - We recognize that entrepreneurs can greatly benefit from ongoing specialized assistance, skill building, and access to resources. Access to ongoing support can help them build their competitive advantage. Our unique Post-Loan Technical Assistance program links CVRLF Borrowers with technical advisors and mentors. We also sponsor learning and networking events and offer cash assistance to Borrowers who wish to attend business-related workshops. CVRLF has also spearheaded a collaborative initiative to launch a regional small business network, Vermont Information & Networking for Entrepreneurs (VINE), providing networking opportunities for underserved entrepreneurs. - CVRLF is a nonprofit 501(c)(3) organization registered in the State of Vermont, is certified as a Community Development Financial Institution by the US Department of Treasury and a member of the National Community Capital Association. CVRLF is administered by the Central Vermont Community Action Council (CVCAC).
- For more information, visit CVRLF Website at http://www.cvcac.org/Services/revolvingloan.htm or contact the Central VT Revolving Loan Fund, Inc.
Emily Kaminsky
CVRLF Fund ManagerC/o CVCAC
195 US Route 302-Berlin
Barre, VT 05641-2267
Phone # (802) 479-1053, ext. 263
Financial
Access Program
The Vermont Financial Access Program (FAP) is a program which utilizes a "pooled reserve" concept to enhance opportunities for small businesses to access commercial credit. Premiums which are based on a percentage of the loan amount are paid to VEDA by a participating bank and are deposited into a reserve account on behalf of that bank. Bank and borrower contribute equally in the payment of the premium, however, the bank may pass its portion of the premium onto the borrower. VEDA matches this premium with insurance. This reserve account is dedicated to cover losses which may be incurred by the bank on loans which are enrolled in FAP, thus giving the bank an incentive to make loans they may not otherwise be willing to consider.
Terms of loans are determined by the lending institution; VEDA does not participate in the credit decision. To be eligible, a borrower must be duly authorized to conduct business in the State of Vermont and have gross sales less than $5 million. Loans must be in an amount less than $200,000 and proceeds must be used for industrial, commercial or agricultural enterprises within the State of Vermont.
Vermont Economic Development Authority
Montpelier, VT 05602-3044
Rural
Economic Activity Loans
VEDA, through its subsidiary Vermont 503 Corporation, can provide low interest direct loans for fixed asset financing and for funding inventory and accounts receivable growth through the REAL program.
Loan amounts can be up to 75% of fixed asset projects which are under $25,000 and up to 40% of projects which are over $25,000. The REAL program may also fund up to 50% of a working capital project. The maximum loan amount available through REAL is $100,000. Interest rates are currently 5.5% on fixed asset loans and Prime rate plus 2.0% on working capital loans. (A provision of federal law prohibits REAL loans from being made in the City of Burlington.)
Vermont Economic Development Authority
Montpelier, VT 05602-3044
Small
business Administration
504 FINANCING PROGRAM
504 FINANCING PROGRAM
The 504 loan program provides long term fixed rate financing to business through the sale of guaranteed debentures issued by certified development companies. Loan funds are used for real estate or machinery and equipment but not for working capital or debt payment. The loan is limited to 40% of the project cost and is combined with bank financing and equity. The maximum loan amount is $1,000,000 (up to $1.3 MM for some projects) with loan terms of either 10 or 20 years depending on the use of the loan proceeds. Interest rates are determined at the time of sale of the guaranteed debentures.
Richard Angney Central VT Economic Development PO Box 1439
National Life Drive
Montpelier, VT 05601
Phone # (802) 223-4654
Fees SBA regulations specify limits on fees that must be paid
in connection with SBA 504 funding. The Certified Development
Corporation processing the loan cannot charge more than 1.5%
of the loan and the monthly service fee charged cannot be more
than 0.5% nor more than 2.0% per annum on the unpaid loan balance.
Legal fees related to the loan closing cannot exceed $2,500 without
prior approval by the SBA.
A finding fee of 0.25% to cover the cost of public issuance of
securities and a reserve deposit of 0.5% are required, as is
an underwriting fee of 0.625% of the total debenture amount.
Total fees at closing are usually 4-5% of the debenture amount.
Commentary on the SBA 504 Program.
Small
business Administration
7(a) Guarantee Program
7(a) Guarantee Program
The 7(a) Loan Guarantee Program is the SBA's primary lending program. Section 7(a) of the Small Business Act authorizes the SBA to guarantee loans to small businesses that cannot obtain financing on reasonable terms through normal lending channels. The program operates through commercial lenders that provide loans that are guaranteed by the SBA.
Loans are available for many business purposes, such as real estate, expansion, equipment, working capital, or inventory. The SBA can guarantee up to 80 percent of loans of $100,000 or less, and up to 75 percent of loans above $100,000. Generally, the maximum guarantee amount is $750,000. For a lender requesting the maximum SBA guarantee of 75 percent, the total loan amount available under this program generally would be limited to $2 million. However, there are some exceptions as presented below in the discussion of specialized loan programs. Maturities can be up to seven years for working capital and up to 25 years for fixed assets. Loans to small businesses are delivered through commercial lending institutions; therefore owners should contact their local bank branch to formulate a SBA loan request.
The repayment ability from the business's cash flow is a primary consideration in the SBA loan decision process. Good character, management capability, collateral, and owner's equity contribution are also important considerations. All owners of 20 percent or more equity in the company are required to personally guarantee SBA loans.
Restrictions on Eligibility of Businesses
The vast majority of businesses are eligible for financial assistance from the SBA. However, applicant businesses must operate for profit, have reasonable owner equity to invest, and use alternative financial resources (including personal assets). Also, the business must be engaged in, or propose to do business in, the United States or its possessions.
Specific types of businesses not eligible include:
- Real estate investment and other speculative activities
- Lending activities
- Pyramid sales plans
- Illegal activities
- Gambling activities
- Charitable, religious, or certain other non-profit institutions
The Small Business Act defines an eligible business as one that is independently owned and operated and not dominant in its field of operation. The SBA has developed size standards that define the maximum size of an eligible small business. These, however, represent general industry guidelines.
Industry Size Limitations:
- Retail...................$5.0 to $21.0 million in revenues
- Service................$2.5 to $21.5 million in revenues
- Construction........$7.0 to $27.5 million in revenues
- Agriculture...........$0.5 to $9.0 million in revenues
- Wholesale............fewer than 100 employees
- Manufacturing......500 to 1,500 employees
The proceeds of SBA loans can be used for most business purposes. These may include the purchase of real estate to house the business operations; construction, renovation, or leasehold improvements; acquisition of furniture, fixtures, machines, and equipment; purchase of inventory; and working capital.
Loan Maturities
SBA loan programs are generally intended to encourage longer-term
small business financing, but actual loan maturities are based
on the ability to repay, the purpose of the loan proceeds, and
the useful life of the assets financed. The maximum term depends
on the purpose of the loan.
Small
business Administration
Low doc Program
Low doc Program
Once a small business borrower meets the lender's requirements for credit, the lender may request a guaranty from the SBA through SBALowDoc procedures. It's a quick, two-step process:
- The borrower completes the front of the SBA's one-page application, and the lender completes the back.
- The lender submits a complete application to the SBA and receives an answer within 36 hours.
Interest Rates
- Interest rates can be negotiated between the borrower and lender, may be fixed or variable, are tied to the prime rate (as published in the Wall Street Journal), and may not exceed the following SBA maximums:
- Follows 7(a) Interest Rate structure
Collateral
- To secure the loan, the borrower must pledge available business and personally owned assets. Loans are not declined when inadequate collateral is the only unfavorable factor.
- Personal guaranties of the principals are required.
Maturity
Length of time for repayment depends on -
- Ability to repay, and
- The use of the loan proceeds.
Maturity is usually 5 to 10 years. For fixed-asset loans it can be up to 25 years.
Eligibility
A business is usually eligible for the SBALowDoc if -
- The purpose of the loan is to start or grow a business;
- The existing business employs no more than 100 people, has average annual sales for the preceding three years not exceeding $5 million, and the business including affiliates; the business and its owners have good credit; and the business owners are of good character.
Vermont Job Start
Vermont Job Start
Vermont Job Start was created to help develop self-employment opportunities for low and moderate income Vermonters. Vermont Job Start loans can be used to start, strengthen or expand small business to include purchases of equipment and inventory or for working capital needs. Potential applicants for a Vermont Job Start loan must meet eligibility requirements.
The life-time maximum loan amount is $20,000 and the interest charged is no more than 4% over Prime. The maximum loan term may not exceed 5 years (60 months) with repayment on a monthly installment basis and an application fee of $25.
Further information and applicationsare available by contacting the Job Start office:
Vermont
Small business Development Corporation
This VEDA subsidiary makes loans much the same as the Job Start Program, with emphasis on those businesses owned by low and moderate income Vermonters. Applicant must not be able to access conventional sources of credit. Vermont Small Business Development Corp. can lend up to $100,000, but cannot exceed 50% of total project costs. However, in certain instances loans may be made for up to 75% of a project, not to exceed $50,000. The remaining 25-50% can take the form of a participating lender and equity contribution. At a minimum, 10% of the project cost must be contributed from equity sources. In certain instances where a loan is made in conjunction with a Vermont Job Start loan, this equity requirement may be reduced or waived. (A provision of federal law prohibits the making of Vermont SBD Corp. Loans in the City of Burlington.)
The interest rate on Small Business Loans made for fixed assets is 5.50% fixed. The rate for working capital loans is Prime plus 2%, fixed at closing. There is a floor of 6% and a ceiling of 12% on working capital loans. The term for fixed asset financing will usually be between 5 and 7 years for machinery and equipment and up to 10 years (generally with a 15 year amortization) for real estate. The maximum term for working capital loans is 3 years.
On loans of up to $50,000 there is an application fee of $50. On loans over $50,000 there is an application fee of $100. A 1% commitment fee will be charged on all loans at the time of closing.
Vermont Economic Development Authority
Montpelier, VT 05602-3044
Loan Programs Summary provided courtesy of the Central
Vermont Revolving Loan Fund and the Central Vermont Community
Action Council / 36 Barre Montpelier Road / Barre, VT 05641 /
(802)-479-1053.
Return to Central Vermont or GO TO:
© Copyright Central Vermont Chamber of Commerce © 2004, All rights reserved.
CV Chamber / P.O. Box 336 / Barre VT, 05641
(802)-229-5711 or FAX 229-5713 or [email protected]
In conjunction with
Central Vermont Economic Development Corporation
P.O. Box 1439 / National Life Building / National Life Drive / Montpelier VT, 05602
(802)-223-4654 or FAX 223-4655 or [email protected]