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Park Guidebook | Financing
Micro
Loan Program
Loans up to $25,000 are available for business start
ups and expanding small businesses. The interest rate is 7%
fixed with a 5 to 7 year term. There is a $200 origination
fee and $15 per month servicing fee. For more information
or an application, contact the Otsego County Economic Alliance.
SBA
504 Loans MCDC
The SBA 504 Loan Program provides healthy small and medium-sized
businesses with long-term fixed rate financing for the acquisition
or construction of fixed assets. Projects are financed through
a unique public/private partnership that involves private
lenders financing 50% of project costs, MCDC covering up to
40% of project costs, and small businesses investing at least
10% of project costs. By taking a secondary collateral position
on project assets, SBA provides a “collateral cushion”
for the primary lender and reduces the amount of equity normally
required of the borrower.
The SBA 504 Loan Program is
a “take out” financing program. The SBA offers
an up-front commitment to finance a project. The participating
private lender provides interim financing, advancing the full
amount of project funds during the construction/acquisition
period. After the project is completed, the SBA reimburses
or “takes out” the participating lender by the
amount of the original loan commitment. MCDC loans are actually
funded by the sale of 100% federally guaranteed debentures
on the open market. Click
here for more information.
Venture
Capital Firms MEDC
Equity capital is the financing made available for investment
in promising firms but with a risk of exposure greater than
what is acceptable to traditional institutional lenders. Financing
is provided by sophisticated investors who seek investments
that hold the prospects for large capital gains.
Such investors are referred
to as venture capitalists or Angel investors. Venture capitalists
may be: a) privately owned firms licensed and regulated by
the U.S. Small Business Administration or; b) non-regulated
firms. The former group is known as Small Business Investment
Companies (SBICs). SBICs provide financing in the form of
equity capital, debt financing with an equity sweetener, and
in some cases, straight long-term loans. The non-regulated
firms, which specialize in equity financing, are referred
to as Venture Capital Companies (VCCs).
Click here for more information.
SBA
7a
Serves as the SBA’s primary business loan program to
help qualified small businesses obtain financing when they
might not be eligible for business loans through normal lending
channels. It is also the agency’s most flexible business
loan program, since financing under this program can be guaranteed
for a variety of general business purposes.
Loan proceeds can be used
for most sound business purposes including working capital,
machinery and equipment, furniture and fixtures, land and
building (including purchase, renovation and new construction),
leasehold improvements, and debt refinancing (under special
conditions). Loan maturity is up to 10 years for working capital
and generally up to 25 years for fixed assets. Click
here for more information.
Industrial
Development Revenue Bonds, MEDC
IDRBs are an attractive source of financial assistance to
economic development projects in Michigan. They provide profitable
firms with capital cost savings stemming from the difference
between taxable and tax-exempt interest rates.
Public facilities which generate
a revenue stream (parking structures, for instance) have traditionally
been financed by municipalities through tax-exempt "revenue
bonds." IDRBs apply this same tax-exempt finance mechanism
to the "public purpose" of economic development.
The governmental unit borrows money from private capital markets,
secured only by the project’s revenues rather than the
government’s full faith and credit. Interest income
earned on bonds issued by a governmental entity to finance
a project for a private company which has demonstrated a good
public purpose is exempt from federal, state, and local income
taxes, thereby reducing the cost of capital (including the
cost of letters of credit, remarketing fees, etc.) to an average
75-85% of prime. Click
here for more information.
 For
More Information Contact:
Jeff Ratcliffe, Executive Director
Otsego County Economic Alliance
1062 Cross Street | Gaylord, MI 49735
(989) 731-0288 | (989) 731-0289 FAX
© 2005 Gaylord - Otsego
County Economic Alliance
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