Economic Development Programs

What types of lenders can partner with CountyCorp Development?

• Those that would like to mitigate risk and broaden investment opportunities.
• Lenders who would like a competitive edge through blended rates and lower customer down payments likely to attract a broader range of clients.

What are the benefits of partnering with CountyCorp Development?

• Lenders secure a first mortgage position.
• Lenders mitigate much of their risk as their loan-to-value ratio is 50%.
• Many loan options available, one organization.
• Experienced professional lending and business development staff and fast turnaround time.
• Professional closing and servicing staff.

What are some of the loan programs available?

• SBA 504 enables healthy, growing companies to purchase land, buildings, machinery and equipment, or fund new construction up to $1.5 million (up to $2 million in targeted areas); up to $4 million for manufacturing businesses.
• State of Ohio 166 helps small, growing manufacturing and distribution businesses finance up to $350,000 for land, buildings and equipment.
• Community Development Block Grant revolving loan fund (“CDBG”) offers real estate, equipment and in some cases working capital funding for smaller businesses.
• Child Day Care revolving loan fund provides flexible financing up to $25,000 for licensed child care providers with a need for working capital, equipment and/or real estate funding.

What’s the Lender’s role in the process?

• Lenders refer projects to CountyCorp Development and are the life-blood of our business. Referrals are greatly appreciated. We take care of the majority of the paperwork, reducing the Lender’s workload.
• Lenders approve a loan for their permanent first mortgage and an interim loan for CountyCorp Development’s portion. This interim loan will be taken out by the CountyCorp Development loan when it funds after the borrower’s project is completed.

What is CountyCorp Development’s role in the process?

• We enable small business owners to finance their project with only 10% down – reduces their cash out of pocket at closing.
• We reduce the ongoing cash flow necessary for monthly loan payments by providing long loan terms and below market fixed interest rates.
• We reduce the lender’s risk.
• We meet with you and your customers to explain the process in detail.
• We make loans on behalf of the U.S. Small Business Administration, the Ohio Department of Development or other funding sources.

How does CountyCorp Development fund its loans?

• SBA 504 loans are funded from proceeds of bond sales guaranteed by the full faith and credit of the US Government.
• Ohio Regional 166 loans are funded from resources provided by the State of Ohio and managed by CountyCorp Development
• CDBG loans are funded from resources originally provided to CountyCorp Development by Montgomery County from HUD.
• Child Day Care loans are funded from the Ohio Dept of Health and Human Services.

What is the typical SBA 504 Financing Structure?

Typical 504 Financing Structure

Source	Project Costs	Lien	Funding Limits	Interest Rate	Term Real Estate	Term M&E
Financial Institution	50%	1st	No Limit	Market	10 years or longer	7 years or longer
SBA 504	40%	2nd	up to $2M ($4M for manufacturing)	Fixed	20 years	10 years
Borrower	10%	n/a	n/a	n/a	n/a	n/a
Note: If a public policy goal is being met, the maximum 504 loan amount increases to $1,500,000 To fund the 504 portion of the loan, CountyCorp Development issues an Authorization for Debenture Guarantee that is fully guaranteed by the SBA and sold on the private bond market. CountyCorp Development will work with you and the borrower to make the application process as easy as possible.

What is the typical Regional 166 Financing Structure?

Typical 504 Financing Structure

Source	Project Costs	Lien	Funding Limits	Interest Rate	Term Real Estate	Term M&E
Financial Institution	50%	Shared 1st	No Limit	Market	10 years or longer	7 years or longer
Regional 166	40%	Shared 1st	up to $350,000	Fixed	up to 15 years	up to 15 years
Borrower	10%	n/a	n/a	n/a	n/a	n/a
Note: The term of the Regional 166 loan is set to match the term offered by the financial institution. CountyCorp Development will work with you and the borrower to make the application process as easy as possible.

What are the Down Payment Requirements?

Typically, the small business contributes 10% of the project costs. If the business is a startup (when Management has less than 2 years of ownership experience), the down payment increases to 15%. If the loan will finance a single use property, the down payment increases to 15%. If the project is for a single use property being financed for a start-up business, the down payment increases to 20%.

What Businesses are eligible?

Generally, the applicant must be a for-profit business whose business net worth is less than $8.5 million and whose after tax income is $3.0 million or less, on average, for the last two years.

What projects are eligible and what are the costs?

504 financing is used to acquire, construct, renovate or expand an owner occupied facility. It can also be used to acquire major machinery and equipment with a useful life of at least 10 years.

In addition to the acquisition and construction costs, the "soft costs" (appraisals, environmental, construction interest, closing costs, etc.) can be financed in the 504 loan. Attorney fees cannot be financed. This allows the business to preserve working capital that will be needed in the larger facility.

What are the occupancy requirements?

Financing of:	Initial Occupancy	Occupancy After 10 Yrs	Allowable Permanent Lease
Existing Building	51%	51%	49%
New Construction	60%	80%	20%

What is the typical project size?

Project sizes typically range from $200,000 to $6,000,000 with the 504 loan ranging from $150,000 to $1,500,000 ($2,000,000 when public policy goals are achieved, and up to $4,000,000 for manufacturers meeting SBA defined NAICS codes). The senior lender loan may exceed 50% of the project total, which enables larger companies to take advantage of the benefits of the 504 loan up to the maximum amount allowed.

What is the Banker's Role?

The senior lender processes its loan as it would any conventional loan request. CountyCorp Development and the bank can work together to collect documents from the borrower. Once approved, the senior lender will utilize its own loan documents to close their loan.

Appraisals and environmental reports should be ordered naming all parties (the senior lender, CountyCorp Development, and the SBA) with copies provided to CountyCorp Development as received.

Generally, the senior lender provides "interim" or "bridge" financing while CountyCorp Development’s 504 loan is a permanent take-out loan. Thus, the lender would provide the full 90% financing up front during the construction, renovation, or closing period based on the 504 commitment to take out the applicable portion of the interim financing once the business occupies the property.

When the 504 loan closes, the senior lender will be asked to provide copies of its loan documents, provide copies of its draw schedules (for construction or renovation projects), certify that there has been no adverse change in the borrower's financial condition, and agree to various other provisions such as to provide 60 days advance written notice of default prior to foreclosure proceedings.

At CountyCorp Development, we strive to be the 504 expert and we ensure that all SBA requirements are met so our lending partners can focus on the senior lender portion of the loan without having to memorize all of the SBA 504 Loan intricacies.

What are the advantages of an SBA 504 Loan?

Advantages for commercial lenders

• Reduce risk on projects - resulting in 50% loan-to-value-ratio
• Fixed or variable rate option on bank loan
• Meets economic development and community reinvestment goals
• Keeps the bank competitive by offering attractive financing for its clients

Advantages for small business

• Low down payment - helps conserve valuable operating capital
• Below market fixed rate - avoids future rate fluctuations, keeps costs of loan low
• Long-term - brings debt service in line with cash flow generated by business

Can I sell all or a portion of my business if I have an SBA 504 loan?

Without prior approval, owners are restricted to selling no more than 5% of their ownership. Contact CCD for more information.

Questions more typically asked by business owners. Please contact us to address your specific situation.

What does CountyCorp Development finance?

• Real estate for business expansion
• New buildings, additions or renovations
• Machinery or equipment, however rolling stock is ineligible
• Working capital

What are some of the loan programs available?

• SBA 504 enables healthy, growing companies to purchase land, buildings, machinery and equipment, or fund new construction up to $1.5 million (up to $2 million in targeted areas); up to $4 million for manufacturing businesses.
• State of Ohio 166 helps small, growing manufacturing and distribution businesses finance up to $350,000 for land, buildings and equipment.
• Community Development Block Grant revolving loan fund (“CDBG”) offers real estate, equipment and in some cases working capital funding for smaller businesses.
• Child Day Care Facility revolving loan fund provides flexible financing up to $25,000 for licensed child care providers with a need for working capital, equipment and/or real estate funding.

How much do I need for a down payment (i.e., the amount needed at closing)?

• Typically, 10% of the lower of cost or value of your project. An additional 5% is required for special purpose buildings. An additional 5% is required for start-up businesses.

What are your typical terms and interest rates for your programs?

• SBA 504 loans have fixed interest rates with maturities of either 10 or 20 years.
• State of Ohio Regional 166 loans have low fixed interest rates at 2/3 of Prime Rate with maturities of up to 15 years. Minimum interest rate of 2%, maximum of 6%.
• CDBG loans have low fixed interest rates at 2/3 of Prime Rate with maturities up to 15 years, though typical terms are less than 10 years. Minimum interest rate of 3%.
• Child Day Care Facility loans have low fixed interest rates at 2/3 of Prime Rate with maturities up to 5 years.

What is the average minimum and maximum loan amount?

• SBA 504 loans typically average between $300,000 and $500,000, and can go up to $4 million for manufacturing. Minimum SBA 504 loan amounts are $50,000.
• Regional 166 loans average approximately $150,000, and can go up to $350,000. There is no minimum loan amount.
• CDBG loans average $75,000, and can go up to $100,000. There is no minimum loan amount.
• Child Day Care loans can go up to $25,000.

What fees are involved?

• All loans from CountyCorp Development require the borrower to pay essentially all of the items charged directly to CCD for the loan being provided (i.e. closing costs: title insurance, legal costs, filing fees, etc.)
• SBA 504 loan fees total 2.15% plus closing costs (up to $2,500 closing costs may be financed with the loan).
• Regional 166 loan fees total 1.5% of the loan amount plus closing costs
• CDBG loan fees total 1.5% of the loan amount plus closing costs.
• Child Day Care loan fees total $100 plus closing costs

What collateral does CCD require for their loans?

• Assets financed with the proceeds of the CCD funding are typically used as collateral.
• Personal guarantees of all owners of 20% or greater of the businesses involved will be required to guarantee the loan.
• While CCD generally collateralizes the loan with the project assets, other collateral may be necessary.

What’s the typical turnaround time for loan approval?

• Two weeks for an approval, once we have your application and corresponding paperwork, though a shorter turnaround is possible.
• Our Board holds monthly meetings, however, our Board also responds to loans when we receive them so our process is faster than most.

What about refinancing?

• Generally the answer is no, refinancing is not an eligible project to be funded by CountyCorp Development.

Where does the money come from?

• SBA 504 loans are funded from proceeds of bond sales guaranteed by the full faith and credit of the US Government.
• State of Ohio Regional 166 loans are funded from resources provided by the State of Ohio and managed by CountyCorp Development
• CDBG loans are funded from resources originally provided by HUD to Montgomery County.
• Child Day Care loans are funded from the Ohio Dept of Health and Human Services.

Do I have to change banks?

• No. Any lender, in-state or out-of-state may participate with CountyCorp Development.

What types of small businesses does CCD work with?

• Owner occupied, for profit small businesses.
• Most companies have annual sales between $500,000 and $5 million.
• The maximum number of employees is 500, but most of the firms we work with have between 5 and 50 employees.

What do you need from me?

• To secure a loan, CCD requests that applicants provide project descriptions and cost estimates, as well as company financial and tax information and other details.

What is a CDC?

A Certified Development Company (CDC) finances business expansion through the purchase or development of a building and/or major equipment via the SBA 504 loan program. CDCs are certified by the SBA to offer the SBA 504 Loan Program. As a CDC, CountyCorp Development’s professional staff will work directly with you to tailor a financing package that meets program guidelines and the credit capacity of your business.

What is an SBA 504 Loan?

The United States Small Business Administration (SBA) enables growing businesses to secure long-term, fixed-rate financing for commercial industrial real estate and/or major machinery and equipment through the SBA 504 Loan Program. The program is designed to promote local economic development by helping healthy, growing businesses finance the acquisition of long-term fixed assets, including land, buildings, and major machinery and equipment. The 504 Program gives small business owners access to the same low-cost, fixed-rate, long-term financing that large businesses have through the bond markets.

Why should I consider an SBA 504 loan?

The SBA 504 loan Program offers many benefits to small businesses. The benefits include low down payment (allowing the small business to preserve working capital), longer terms, and larger loan amounts than may be available through a conventional loan. In most cases, the borrower's down payment will be 10% of project costs. If an appraisal deems a building as single purpose or if the business has less than 2 years of operating experience, additional injection (down payment) will be required. In addition, interest rates on the SBA 504 Loan will be below market and the rate will be fixed for the loan term.

Who is Eligible?

Independently-owned, for-profit businesses that meet 504 project requirements are eligible. Net worth must be $8.5 million or less, and the average net profits after taxes cannot exceed $3.0 million per year for the previous two years.

How long do you have to be in business to qualify?

There is no requirement regarding length of time in business; however, start-up businesses are subject to additional injection (down payment).

Can the building be owned by an entity other than the operating company?

Yes, a real estate holding company can own the building. However, in this scenario, the operating company, the real estate holding entity, and all individuals with 20% or more interest must guarantee the loan.

If the operating company is leasing the building from a real estate holding entity, what documentation is needed?

Leases

If the Borrower is different from the Operating Company, there must be a lease between the Borrower and the Operating Company for 100% of the property being financed with a 504 loan. If there are third-party tenant(s), the sublease(s) must be between the operating company and the third party tenant(s).

Subordination Agreements

Every lease and sublease on the property must be made subordinate (or junior) to the 504 Deed of Trust. The Borrower and the Operating Company must sign the Subordination Agreement related to their lease. The Operating Company and any subtenants must sign the Subordination Agreement related to their lease.

How much can I borrow?

A CDC financed project can be of any size, but the SBA backed portion of the loan is usually limited to 40% or $2,000,000. However, in some instances, the SBA backed portion can go up to $4,000,000. The minimum debenture is $50,000 with typical projects ranging in size from $200,000 to $6,000,000.

How can my 504 funds be used?

504 loans may be used for:

• Land or building acquisition
• Building construction or remodeling
• Acquisition of fixtures and heavy machinery

The qualifying business must become the primary occupant of the property financed. Proceeds cannot be used for working capital or costs unrelated to the project.

What costs can be financed?

All costs that are directly attributable to the purchase or construction project can be financed, assuming that the appraisal is high enough.

What fees are involved?

• SBA Fee: approximately 2.15% of the SBA portion of eligible project
• Lender Fees: Negotiated with senior lender, but typically 1% or 2% on lender loan.
• ALL SBA fees and many lender fees are financed.

What are the collateral requirements? Will I have to pledge my home?

The subject property to be financed will be the collateral. CountyCorp Development does not typically take personal residences as collateral. However, on a case-by-case basis, CountyCorp Development may exercise the option to take additional collateral.

How is my interest rate calculated, and can I lock in the rate today?

The interest rate on the SBA loan is tied to the 5 or 10 year U.S. Treasury rate in effect on the date of the SBA 504 loan funding and is then fixed for the loan term. The rate cannot be locked in prior to funding.

Is my loan assumable?

SBA 504 loans are fully assumable. Regional 166, CDBG, and Child Day Care Facility loans are not assumable. Contact us for more information.

Can my equity injection (down payment) be borrowed?

Preferably the borrower will put at least 10% of their own funds into the project. The down payment may be borrowed, but owners must show that there is sufficient income to service the debt from sources outside of the operating business.

Can I refinance a building I already own?

No, unless the project includes an expansion of the building.

Can my down payment be other than cash?

Yes, the down payment can be cash or land value, which can include building, structures, and other site improvements that will be part of the project property, previously acquired.

Can you recommend a good lender bank to use?

We recommend approaching your business lender as an initial step. CountyCorp Development can work with any lender.

Is there a lot of paper work?

The paper work is comparable to that of any business loan. We have made efforts to streamline the process wherever possible.

What is the Turnaround Time?

The procedure from a completed application submission to disbursement of funds is different for every project, depending on the complexity of the project and the loan. CountyCorp Development strives to turnaround loan approvals within two weeks. With our loan approval, lenders typically will proceed with the funding of the interim loan to enable your project to move forward.

Can I Obtain another SBA 504 Loan?

Many 504 borrowers have obtained second or third SBA 504 Loans to finance additional locations, expand existing locations, or purchase major machinery and equipment. Subsequent applications are simplified since CountyCorp Development already has an active file of information, and therefore your loan request can usually be processed with a minimum of paperwork. Contact us to find out about your eligibility to obtain another SBA 504 Loan.

When is my payment due?

Payments are due on the first business day of each month, and are made by automatic debit coordinated by the Central Servicing Agent (“CSA”), Colson Services Corporation. Late fees are due if payment is received after the 15th of the month.

From what account are the payments being debited?

In the loan closing process, you designated an account from which payments will be debited, by filling out a form and providing a voided check. The account number of your designated account is referenced in the Notification of Funding letter which was provided shortly after your loan funded. This letter also included your payment amount, effective note of interest, and general ongoing requirements.

Can I change my automatic payment to a new account?

You may change the account for purposes of the automatic payment at any time; however, please note that changes must be received in our office by the 10th of the month in order to become effective for the following month's payment. Payments must be made by automatic debit. Payments by check are not accepted.

Please complete a new "ACH Form" and mail it back to our office at:

130 West Second Street, Suite 1420, Dayton, OH 45402

Feel free to call us at (937) 225-6328 if you have questions concerning the form. The completed "ACH Form" and voided check must reach our office before the 10th of the month to be put into effect for the following month.

Who is Colson Services?

Colson Services Corporation is our Central Servicing Agent (CSA). This corporation handles the payment processing and loan accounting for all SBA 504 Loans. You will notice a notation on your account statements referencing Colson Services followed by your loan number.

If you have any questions or problems about payments, please contact CountyCorp Development. Colson Services Corporation does not handle any client phone calls. Any correspondence regarding your loan payments should be directed through CountyCorp Development.

What are the SBA, CSA and CDC fees shown on the amortization schedule?

SBA (Small Business Administration). The fee paid to SBA represents a guarantee fee required under the Code of Federal Regulations (CFR) to cover a loss reserve established for the program.

CSA (Central Servicing Agent). The CSA is also known as Colson Services Corporation. The CSA fee covers charges by Colson Services Corporation to handle payment processing and loan accounting. Colson Services Corporation is appointed by the SBA to accept monthly payments, hold the monthly payments until the semi-annual debenture payment is due, pay the semi-annual debenture payments, and calculate and accept full payments on the SBA 504 Loan.

CDC (Certified Development Company) and for purposes of this website also known as CountyCorp Development. The CDC is required to service the loan on behalf of the SBA by enforcing the terms of the loan documents. The CDC fee is set forth in the Code of Federal Regulations to pay for the servicing of SBA 504 Loans and cannot be waived.

Why is my payment higher than the payment amount shown on the note?

Servicing Fees. Your total payment includes the Note payment and the three (3) fees payable to the SBA, CSA and CDC (see previous FAQ). Every five (5) years, the fees are adjusted downward and payment is decreased. Please refer to your Amortization Schedule for balance, payment, and fee information.

What is my Note Rate & Effective Rate?

Your Note Rate is shown on the Note and Amortization Schedule included with your loan documents. The rate stated on the Note does not include the SBA, CSA and CDC servicing fees (see FAQ #7); however, the "Effective Rate" as referenced in your Notification of Funding letter does include these fees. Although the interest rate on the Note is fixed, payments are lowered every 5 years as the fees are adjusted.

Why is the rate on my note higher (or lower) than estimated during the loan process?

The rate on the loan is determined approximately one week prior to the date the loan is funded. Your loan is pooled with all of the other SBA 504 Loans funded in the same month, and is then sold in the form of debentures on the bond market. Debentures are priced based on current market conditions. Rates typically follow the trends of US Treasury rates, although rates on 504 debentures are higher.

How can I find out my loan balance?

Check the loan Amortization Schedule provided to you after your loan funded. If you can't locate the Amortization Schedule, contact our office for a copy. Please note that the loan balance is not the same as the loan payoff amount.

How can I find out the amount of interest paid on my loan?

Annually, a Form 1098 is provided to the borrowing entity stating the interest paid on the loan for the most recent calendar year. Alternatively, you can check the Loan Amortization Schedule provided with your other loan documents. If you have had late payments or a deferment of payment(s), the information in your amortization schedule may not apply and you should refer to Form 1098 or contact us for correct information.

Can I prepay my loan?

Yes, loans are funded via the sale of bonds which requires a slightly different payoff process than a typical bank loan. Partial prepayments are not accepted. A possible alternative to loan payoff may be loan assumption. Please contact us right away if you are considering loan payoff or loan assumption.

Prepayment of an SBA 504 Loan:

• CountyCorp Development must be notified at least 8 calendar days prior to the prepayment date. Payoff dates for SBA 504 Loans are the 3rd Thursday of each month.
• 504 loans must be prepaid on the 3rd Thursday of any month.
• All prepayments must be made by wire transfer.
• Prepayment premiums may apply. Prepayment premium levels decline at six (6) month intervals based upon loan funding month; and are eliminated once half of the term has passed (i.e., after 10 years, there is no prepayment premium for a 20 year loan. After 5 years, there is no prepayment premium for a 10 year loan).

Prepayment of Regional 166, CDBG, or Child Day Care Facility Loan:

• May all be prepaid without penalty and are not assumable.

Is there a prepayment penalty?

Yes. For a 20 year term loan, there is a declining prepayment penalty in the first 10 years on the SBA portion of your loan. For a 10 year term loan there is a declining prepayment penalty in the first 5 years on the SBA portion of your loan.

What are the insurance requirements on my building?

You must carry insurance levels on your building as noted in your SBA 504 Loan Authorization. The U.S. Small Business Administration must be shown as 2nd Mortgagee and Loss Payee with Form 438 BFU, CP218, or a comparable form. Evidence of insurance must also show the amount of coverage on the building and include replacement cost coverage. Please show the 2nd mortgagee and loss payee on the insurance policy as follows:

U.S. Small Business Administration
& CountyCorp Development.
130 West Second Street, Suite 1420
Dayton, OH 45402

How do I know how much building coverage I need?

A general rule of thumb to determine the required dollar amount of coverage needed is to subtract the "Land value" from the "As completed value" found in your appraisal.

Does my Business Personal Property need to be insured also?

It is good practice to protect your investments; however, SBA only requires the loss payable form - such as 438 BFU, CP1218, or comparable form - for business personal property when Security Agreement and UCC Fincancing Statement are included and filed as part of your collateral with your SBA 504 Loan.

I think my building may be in a Flood Zone, how can I find out?

Generally, if you have received mortgage financing in the past, your mortgage holder will have received a Flood Certification from FEMA. We suggest contacting your existing mortgage lender.

I changed my insurance agent. Do I need to let you know?

Yes, we would appreciate the information about your new agent. Helpful information includes your agent's name, address, phone number, fax number, if available, and your policy number.

Who pays the Property Taxes on the real estate?

You are responsible for paying the property taxes. No escrow for property tax payments or impound account on the real estate has been included with your loan. Please check with the County Treasurer in which your property is located to determine when your real property taxes are due.

Why are financial statements required?

The submission of annual financial statements and/or tax returns are part of the loan commitment. Please submit your annual business financial statements and/or tax returns to our office no later than three (3) months after your fiscal year end.

Why am I asked for an employee job count?

A requirement of the SBA 504 Loan was to create and/or retain a certain number of jobs. CountyCorp Development is required by the US Small Business Administration to obtain this information at the two year anniversary of the loan funding date.