Business Start Up Assistance FAQs
A “microenterprise” is simply a very small, often home based – business. Typically, a microenterprise would have fewer than 5 employees, one of whom is the owner, and has $20,000 or less in business assets.
The Microenterprise Development Program provides information, training, and one-on-one coaching for people who are interested in starting or growing their own small business including:
- A monthly workshop which explores the pros and cons of self-employment.
- Business start-up workshops covering all of the tools needed to start a business.
- Focused workshops on issues of specific interest such as product marketing, web page design and understanding financial statements.
- One-on-one counseling beginning with entry into the program and continuing through start-up and expansion.
- Access to an on-site library of business reference materials and the availability of personal computers with Internet access and word processing capabilities.
- The availability of microloans of up to $5,000 to assist with start-up, expansion or stabilization of a small business.
- It will help you learn and use the ?language of business? to develop a plan for operating your business
- It provides resources, coaching and on-going support as you launch and grow your business
- It will help you work toward becoming self-sufficient while being your own boss
- It will help you grow your business to improve profitability
No, the program is free to individuals within the targeted income group. Funding for program participants is provided by a Community Development Block Grant from the State of California and local counties.
Anyone interested in learning more about being self-employed may attend the monthly workshops. Extended workshops are available to low and moderate-income Shasta County residents, based on established income guidelines. However, we can sometimes include people who do not fall within these guidelines by using other funding sources.
Please call us so we can discuss different options. If you have been in business for an extended period of time, your needs may be better served by one of our other programs.
Once you know about the program, we ask that you carefully consider whether you are ready to commit to the extended workshop and business planning process. This includes assessing your family, child care and transportation situation and whether your schedule and ours will coordinate.
Next, we will need to schedule you for the enrollment process and may also ask you to make an individual appointment with our staff to describe and discuss your business idea prior to starting the extended workshop.
This depends on the local economic climate and consumer demand as well as your skills, experience, goals, resources, etc. It is not a question we can answer for you, but the workshops we offer can help you with the decision making process.
Commercial Real Estate Loan Program FAQs
The SBA 504 Loan Program is a fixed asset financing program for expanding small businesses. It is the first federal financing tool to recognize the importance of small businesses in the job creation process through their physical plant expansions. The SBA 504 is the Economic Development Program of the U.S. Small Business Administration (SBA).
Small businesses, inherently unable to tap into the long-term capital market, can do so with the SBA 504 loan. Terms and conditions more suited to the needs of small business are possible. The structure of SBA 504 loan financing supplements private sector financing from conventional lending sources.
Simply contact Superior California Economic Development today and we will start you on your way. We conduct a no-charge prequalification of your business to determine eligibility.
- Acquisition of vacant land for construction of a building
- Acquisition of land and building
- Leasehold improvements
- Renovation of building; addition to building
- Construction of a building
- Acquisition of a commercial fishing vessel or party boat
- Acquisition of heavy duty machinery & equipment (such as printing press)
- Associated soft costs: title searches & insurance; attorneys fees; appraisals; environmental reports; architects; permits; surveys; installation of machinery; points on bridge loans, small amount of furniture and fixtures, etc.
- Not permitted are mortgage broker fees; points on permanent financing; moving expenses.
- Refinancing is not permitted except to take out financing on property acquired within last 9 months with interim funds.
Superior California Economic Development can lend you up to 40% of the project cost with a dollar cap of $1,500,000. Superior California Economic Development can exceed $1,500,000 and go up to $2,000,000 of SBA 504 financing under the following conditions:
- the project will help revitalize a business community with a written revitalization plan or
- the project will help your company to expand its exporting or
- your company is 51% or more minority, woman or veteran owned or you are locating in a rural area or
- the project will increase productivity and competitiveness by retooling, modernization or assistance in competing with imports or
- your business was affected by federal budget cutbacks (such as defense downsizing).
Superior California Economic Development can also lend up to $4,000,000 for eligible manufacturing projects.
Independently-owned, for-profit businesses that meet SBA 504 project requirements are eligible. In most cases, these are businesses which are ready to expand by purchasing fixed assets ranging from $125,000 to several million dollars. Net worth must be $7 million or less and average net profits after taxes cannot exceed $2.5 million per year for the previous two years.
SBA 504 financing is usually provided through the sale of a 20-year, fixed interest rate debenture (bond) with level debt payments. Interest rates are approximately one point over the current ten year U.S. Treasury issues.
Debt refinancing is prohibited under the SBA 504 loan program.
Don't worry. Superior California Economic Development can introduce you to a number of lenders who have an experience with the SBA 504 Loan Program.
That is no longer the case. The SBA has streamlined the program and the SBA 504 application requirements closely resemble your bank's application requirements.
No. Once your SBA 504 loan is approved in writing by the SBA the lender participating in the project may fully fund the purchase of the real estate and/or machinery and equipment.
Land may be used as the equity injection in the project. The appraised value may be used if the land was acquired more than two years prior to the application date and the appraisal is accompanied by a title report covering the sale history for the past five years. Otherwise the lower of the cost or market value must be used.
If the project involves the acquisition of an existing building, the small business applicant must occupy at least 51% of the total building space and SBA 504 program proceeds many not be utilized to finance the tenant-finish out of any portion of the building not being occupied by the small business.
If the project involves the construction of a new building, the small business applicant must occupy at least 60% of the total building space upon completion and occupy at least 80% of the total building space within ten years of completion. SBA 504 program proceeds many not be utilized to finance the tenant-finish out of any portion of the building not being occupied by the small business.
You may pay-off an SBA 504 loan in full at, or prior to, a schedule maturity date, but will incur a prepayment premium over the first half of the life of the SBA 504 loan. This premium penalty declines each year. Partial or additional payments may NOT be made under the SBA 504 loan program.
Owners must be US citizens or registered aliens with green card. Owners cannot be convicted felons currently on probation. Anyone who owns 20% or more of the operating company must personally guarantee (unsecured general guarantee). Liquid assets of the principals are taken into account in determining eligibility. Too much liquid assets owned by a principal could disqualify the loan because it will be deemed that the project could be financed by the principal without SBA 504 assistance.
Superior California Economic Development takes a subordinate (second mortgage) to secure its 40% portion of the financing, and Superior California Economic Development takes a security interest in assets financed. Key Man life insurance is generally not required unless there is no succession of management. Other assets of the business or principals are generally not required, unless the company is a startup or the credit is unusually risky or the asset being financed is considered a single purpose asset or doesn't appraise high enough.
All of the fees on the SBA 504 loan are added to the loan amount so that you can amortize their cost over the loan term. You will sign a note for the 40% of project cost plus the fees. Payments on the SBA 504 loan are made by ACH debit to the borrowers designated checking account on the first of each month after the loan closes. Payments on the 504 loan are separate from your payments on the 50% first mortgage loan.
Business Loan Program FAQs
In order to qualify for a business loan, your business must:
- Be for profit
- Be located in Shasta, Siskiyou, Modoc, Trinity, Humboldt, Del Norte, Butte or Tehama County.
- Demonstrate the ability to repay the loan from business-generated profits
- Create or retain jobs with the loan funds
You can use your business loan to:
- Start-up your business
- Purchase an existing business
- Acquire land or a building
- Purchase machinery & equipment
- Purchase inventory
Additionally your business loan can be used for working capital or as an SBA companion loan.
SCED can lend as little as $5,000 or up to $250,000.