Business and its affiliates size standards:
- Total tangible net worth cannot be more than $15,000,000; AND
- Two year, average, after tax net income cannot exceed $5,000,000
- Industry size standards – gross sales or full time equivalent jobs limits for each industry.
SBA’s Affiliation Overview:
- Companies are affiliated when one controls or has the power to control the other, either directly or indirectly (i.e. ownership, management, current/previous relationships, contractual, etc.)
Stock Ownership Affiliation:
- More than 50% stock ownership or control of voting stock.
- One owner is large compared to any other individual or related block of stock.
- Two or more owners with approximately equal ownership percentages that are large compared to any other individual or like group of stock results in the block of equal owners and each owner separately to be controlling and affiliated unless evidence is shown to determine otherwise.
- Board of Directors, CEO and/or President may control when widely held voting stock and no single block of stock is large may create affiliation. CEO of two separate companies could make companies affiliated.
- Stock options, convertible securities, or agreements to merge may create affiliation.
- Common management, joint ventures, franchise or licensing agreements may create affiliation.
- Family members, common investments, or economically dependent may create affiliation.
- Officers, directors, owners, or key employees of one concern organize a new concern in the same or related industry with common contracts, customers, etc. may create affiliation.
Economic Development & Public Policy Goal Requirement:
- One job created for each $75,000 (Manufacturing – $120,000) of SBA 504 loan amount; or
- Project located in rural area; or
- Operating business owned 51% by a women, veteran, or minority; or
- Manufacturer; or located in an area with a community plan for redevelopment; or
- Renewable energy project (geothermal, solar panels, energy efficient bldg., etc.); or
- Businesses affected by new federal mandated requirements, base closings; or etc.
Eligible Uses of Funds:
- Purchase bare land or land & building
- Remodel of existing building
- Construction of building
- Purchase of furniture, fixture, & equipment
- Bank “Interim” Loan Closing Costs & Interest Expense
- Appraisal Report & Environmental Reports
- Prior Land/Bldg./Equipment purchased not funded with a term note (contract or bank).
Refinance fixed asset debt up to 50% of new investments (#1 to #7 above). Refinanced debt is limited to the following debt:
- 85% of the original debt proceeds must have financed fixed assets.
- Current for last 12 consecutive months.
- Reducing debt’s payments by 10%, or have a balloon feature, etc.
*Because the bank & Net 504 loans cannot exceed 95% of appraised value, the Soft Costs (#5 thru 7) may or may not be able to be funded within the 504 project.
Refinance fixed assets:
Eligible uses include Qualified Debt and Business Operating Expenses and must meet the following requirements and limitations:
- At least 85% of each loan must have originally purchased real estate and/or long term equipment.
- Loan(s) must have been in place for 24 months and current for the last 12 months.
- Borrower must have de minimus ownership change in the last two years.
- Qualified Debt cannot include term loans involved in a federal program (i.e. SBA, USDA, etc.).
- Qualified Debt refinancing project cannot exceed 90% of collateral value.
- Business Operating Expenses includes business expenditures incurred or due within the next 18 months. These Expenses may include salaries, rent, utilities, inventory, line of credit (includes SBA loans), FF&E, and building improvements.
- Refinancing Projects that includes Business Operating Expenses cannot exceed 85% of collateral value.