$10 Million 504 ACE Loan Fund Unvieled For Small Business & Non Profits
The LDC succeeded in its efforts to give more loans to businesses
and organizations in economically distressed areas by creating
its 504 Accelerated Capital Express (ACE) Loan Fund. With
an unprecedented participation from banks, the Fund closed with
$10 million and included investors from Bank of the West, City
National Bank, Comerica Bank, Mellon 1st Business Bank, US Bank,
Union Bank, Washington Mutual and Wells Fargo Bank.
The objective of the 504 Accelerated Capital Express Loan Fund
I (504 ACE Fund) program is to provide the most flexible commercial
real estate lending program to serve borrowers operating in distressed
neighborhoods. The social objective of the fund is to stimulate
business expansion, job creation, and improve access to social
services revitalization by providing capital to assist small businesses
and non profit organizations with a real estate finance needs.
This program combines the underwriting fundamentals of the SBA
504 with the capital formation abilities of both commercial banks
and the emerging community development secondary markets. The 504
ACE Fund was established to provide long term permanent financing.
Use of Funds:
Funds may be used for commercial/industrial real
estate acquisition, construction or renovation, and leasehold improvements.
Eligibility Criteria:
To be eligible, a business must meet the
following: (1) have at least a three year operating history (2)
a tangible net worth (3) a previous two-year average annual net
profits (4) owner occupied and investor transactions are eligible
(5) there must be sufficient cash flow on a historic basis to cover
projected debt service and (6) Borrower must have an acceptable
credit history. Non-profit companies are eligible. One new
job must be created for $35,000 of 504 ACE loan proceeds or other
positive community impact.
Loan Amounts:
Loan amounts range from $100,000 to $2 million for
projects meeting the LDC's community impact goals which include:
business district revitalization, expansion of exports and expansion
of minority business development.
Fees:
Loan fees are approximately 2.5% - 3.5% of the loan amount
plus $2,000 for documentation and closing cost.
Rate:
Fixed rate or variable rate pricing is available and determined
at the time of commitment. Pricing is normally based on Treasury
Market Rate plus market driven spread and servicing fee.
Term:
The maximum term shall not exceed 15 years with amortization
up to 25 years.
Collateral:
The primary collateral shall be a first and/or second
deed of trust on real estate and/or security interest in equipment
or machinery. Personal guarantees will also be required.
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