1. Financing and Economic Development for Small Businesses and Lenders By Loree Van Bebber 03-29-16 A Small Business Lender

2. WHO WE ARE Cal Coastal is a Certified Development Company (CDC). A nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the Small Business Administration (SBA) and private-sector lenders to provide financing to small businesses.

3. 504 LOAN PROGRAM Typically, a 504 project includes a loan secured with a senior lien from a private- sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped. CDC/SBA 40% (Maximum $5MM & Energy Projects $5.5MM) Cash Injection 10% Private Sector Lender 50%

4. BASIC ELIGIBILITY FOR 504 FINANCING JOB CREATION/RETENTION – Generally, a business must create or retain one job for every $65,000 provided by the SBA except for “Small Manufacturers” (Small manufacturing is defined as 500 to 1,500 employees.)which have a $100,000 job creation or improve the economy of the locality or achieve one or more public policy goals.  Business district revitalization  Expansion of exports  Expansion of minority business development  Rural development  Increasing productivity and competitiveness  Restructuring because of federal mandated standards or policies

5. ELIGIBLE USE OF PROCEEDS  Acquisition of land/building  Land improvements  Remodel, convert, expand or renovate existing building(s)  Purchase of one or more existing buildings  Operating Company (OC) must occupy 51%  504 Projects funds cannot make tenant improvements

6. ELIGIBLE USE OF PROCEEDS  Acquisition of Machinery & Equipment (generally with a 10 year useful life)  Professional fees  Repayment of Interim points, fees and interest

7. ELIGIBLE USE OF PROCEEDS  Nine Month Rule: Costs incurred within 9 months of the date of application to SBA can be included in project costs.  Waivers available for good cause  Land costs can always be included

8. ELIGIBLE USE OF PROCEEDS  Construction of New Building  OC needs to occupy at least 60% with plans to occupy 80% within 10 years. Can lease up to 20% indefinitely.  Contingency Reserve, not to exceed 10% of construction costs

9. BASIC ELIGIBILITY FOR 504 ENERGY PROJECTS The maximum SBA debenture is $5 million but can go up to $5.5 million for certain energy projects  Energy Reduction of existing energy consumption by at least 10%;  Increased use of sustainable design, including designs that reduce the use of greenhouse gas emitting fossil fuels or low-impact design to produce buildings that reduce the use of non-renewable resources and minimize environmental impact;  Plant, equipment and process upgrades of renewable energy sources such as the small-scale production of energy for individual buildings or communities consumption, commonly known as micro power, or renewable fuel producers including biodiesel and ethanol producers.

10. TERMS, INTEREST RATES AND FEES Interest rates on 504 loans are set one time per month for  Real Estate (March 4.54% ) 20 year amortization  Equipment (March 4.31%) 10 year amortization, every other month  Fees total approximately three percent (3%) of the debenture and will be financed in the loan.

11. COLLATERAL  The project assets being financed are used as collateral.  Personal guaranties of the principal owners are required.  During construction additional collateral maybe required.

12. LOAN PROGRAMS  FARM LOANS – Operating capital and mortgage loans to family farms. (Maximum Loan: $1,399,000)  MICROLOAN PROGRAM – Credit and technical assistance to new or expanding small enterprises. (Maximum Loan $50,000)  INTERMEDIARY RELENDING – Business loans in rural areas. (Maximum Loan $250,000)  MONTEREY COUNTY REVOLVING LOAN FUND – Loans to business located in Monterey County. (Maximum Loan $250,000)  LOAN GUARANTEE – To promote small business enterprises with special emphasis on assistance to those which will create or retain jobs. (Maximum Guarantee $2,500,000)  COMMUNITY ADVANTAGE 7(a) LOAN – Available in California. (Maximum Loan $250,000)

13. Contact Information Loree Van Bebber Cal Coastal “A Small Business Lender” 221 Main Street, Ste. 301 Salinas, CA 93901 831-424-1099