HELPING SMALL BUSINESSES PROSPER
A TRUSTED PARTNER
We have a nearly 40-year history of helping small companies grow and prosper. Incorporated in 1979 by a group of Siouxland business leaders in an attempt to help stimulate the tri-state region’s economy, we have served scores of companies – from manufacturers to retail, recreation to restaurants. And we want to help you grow, too.
Check out our Success StoriesThrough the years, we’ve helped scores of businesses across the state and region prosper and grow.
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CURRENT LOAN RATES
25-Year Fixed (Refinanced)
20-Year Fixed (Refinanced)
SEDC MICROLOAN PROGRAM CHECKLIST
Type of Program: Direct loans to small businesses. Financing Available: $50,000. If amount is over $15,000, must have denial letter from financial institution. Use of Loan Proceeds: Working Capital, inventory, supplies, furniture, fixtures, machinery, leasehold improvements and equipment. Real estate purchases are not eligible. Term of Loan: Maximum maturity of 6 years. Interest Rate: 8% fixed rate. Down Payment: None required. Each situation will be evaluated consistent with sound credit policies. Process Time: 30-45 days from receipt of completed application. Application deadline is the 1st Wednesday of each month. Collateral: First lien on any assets financed by microloan proceeds and other collateral deemed appropriate under the circumstances. Guarantees: Personal Guaranty required of business owner(s). Eligible Businesses: Must meet SBA size standards. Ineligible Businesses: Non-profit, consumer and marketing coops, floor plans, gambling concerns, any concern involved in speculation. Area of Operation: Cherokee, Ida, Monona, Plymouth, Sioux, and Woodbury counties in Iowa; Dakota and Dixon counties in Nebraska; Union and Clay counties in South Dakota. Adjacent counties may also be eligible. Call SEDC for confirmation. Technical Assistance: Borrowers must agree to cooperate with SEDC in development of a plan for intensive technical assistance provided by SEDC at no cost to borrower. Job Creation Criteria: Creation of new jobs not required. Fees: $20.00 credit report fee and all costs involved in closing the loan (approximately $250.00).
Revolving Loan Program
SEDC REVOLVING LOAN FUND(RLF) CHECKLIST
Financing Available: $100,000 or 25% of Total Project Costs (the lesser of) for projects that create/retain jobs. $40,000 or 25% for projects with lower or no job creation/retention. Use of Loan Proceeds: Working Capital and/or Fixed Assets Term of Loan: Term based upon collateral offered Rate of Interest: 2% below primary lender’s rate, floor of 3.50% Downpayment: Typically a minimum of 10% Typical Structure:
65% financed by Private Lender (1st Security Position) 25% financed by RLF (2nd Security Position) 10% financed by Equity Injection
How Long Does It Take: SEDC Board Meets on the Third Wednesday of each month. Only complete applications can be processed. Typically a credit decision can be made within 3 weeks after the first Wednesday (date applications are due) of each month Collateral: Lien on Project Assets or Other Assets as negotiated. Subordinate only to Primary Lender. Guarantees: Corporate Guarantee required on personal loans. Personal Guaranty required on corporate loans. Eligible Businesses: Businesses operating for profit. Area of Operation: Cherokee, Ida, Monona, Plymouth, Sioux, and Woodbury counties in Iowa; Cedar, Dakota, Dixon, and Knox counties in Nebraska; Union and Clay counties in South Dakota. Adjacent counties may also be eligible. Call SEDC for confirmation. Job Creation Criteria: The project must create or retain jobs. Wages paid will also be evaluated. Fees:
Processing Fee: one-time fee of 1% of RLF loan Servicing Fee: annual fee of 1/2% of declining RLF balance Closing Costs: Responsibility of Borrower.
SBA 504 Loan Program
SEDC / SBA SECTION 504 CHECKLIST
Financing Available: The lesser of $5,000,000 (5,500,000 in certain situations) or 40% of project costs. Use of Loan Proceeds: Fixed Assets: land, building, equipment Term of Loan: SBA portion: 10 or 20 years based upon economic life of assets. Private Lender: At least 10 years if SBA amortizes loan over 20 years and at least 7 years if SBA amortizes loan over 10 years. Rate of Interest: Approximately 1 – 1 1/2% above 5 and 10 year Treasury Note, respectively, on the SBA portion. Private Sector Lender–first mortgage to be made at market rate determined by private lender without SBA restriction. Downpayment: A minimum of 10%; New starts 15%; (Special purpose buildings — add an additional 5%) Typical Structure:
First Mortgage * – 50% 504 Debenture – 40% Local Injection – 10% Total 504 Project Cost – 100%
*In any 504 loan, 50% of project costs must be private sector (i.e. Non-Federal guarantee or direct dollars). State dollars count as private sector financing. How Long Does It Take: Typically 4-6 weeks from receipt of a complete loan application package. Collateral: Generally a 2nd mortgage/security interest on all fixed assets purchased with loan proceeds. Guarantees: Corporate Guarantee required on personal loans. Personal Guaranty required on corporate loans. Eligible Businesses: Operating for profit businesses. Ineligible Businesses:
Passive income companies Real estate companies Developers/Landlords Financial institutions Unregulated media firms Not-for-profit businesses
Job Creation Criteria: $65,000 of SBA 504 funds per one job either created or retained. Fees: One-time costs amounting to approximately 2%-2.5% of the SBA portion (are capitalized as part of the loan) and .50% of the bank’s portion. Closing Costs are responsibility of Borrower.
Steps of the 504 Loan Process
There is an initial assessment conducted with the borrower and lender to discuss the project and the SBA loan parameters.The borrower shall complete and provide all documentation needed by SEDC.
SEDC Loan Committee Approval
The SEDC staff performs loan underwriting for the project and receives loan approval from the SEDC Loan Committee. This process takes approximately two weeks.
SBA Loan Approval
SEDC submits the loan application packet to the SBA Loan Processing Center in Sioux City, Iowa for final approval. Approval is usually received within one week.
SBA Written Commitment
The SBA issues a commitment entitled “Authorization for Debenture Guarantee.” This document outlines the terms and conditions which must be met in order to close the SBA loan. SEDC and the borrower review the Authorization for Debenture Guarantee and sign the document.
A copy of the Authorization for Debenture Guarantee is given to the lender. The lender provides the interim financing for the project. The lender must advance funds for both the first and second liens until such time that the SBA loan can be closed and funded.
SEDC will close the SBA loan once all construction and/or renovations have been completed. For projects that involve the purchase of an existing building, the closing will take place as soon as all of the Authorization for Debenture Guarantee requirements have been met. The borrower is responsible for all closing costs incurred by SEDC. This includes but is not limited to: title insurance premiums, recording fees, legal fees, flood determination fees, and courier services.
There is approximately a 45-60 day waiting period from the time the SBA loan closes until the SBA loan funds. The borrower is responsible to pay interim interest to the lender until the funding occurs. On the funding date, the lender receives a wire transfer, to reduce the interim note to the approved permanent note balance. Any excess funds must be paid by the borrower and not added into the 1st lien note. The interest rate for the SBA loan is determined when the SBA loan funds.
SBA Loan Payments
Beginning on the 1st of the month following the funding date, the borrower will begin to make payments on the SBA loan. The borrower will have a separate payment to the lender and to the SBA. The SBA payment is collected by Colson Services, the SBA servicing agent.
SBA Loan Servicing
SEDC requires that borrowers submit annual financial statements prepared by an independent accountant within 90 days of the business’s fiscal year end. SEDC also requires that all insurance remains current and the real estate taxes remain paid on all properties