FAQs - for our Lender Partners

Questions more typically asked by Lenders who may have an interest in the BizCap small business loan programming from County Corp and County Corp Development:

What types of lenders can partner with County Corp 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 County Corp 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 BizCap small business loan programs available?

  • SBA 504 enables healthy, growing companies to purchase land, buildings, machinery and equipment, or fund new construction up to $5 million; up to $5.5 million for manufacturing businesses.
  • State of Ohio 166 helps small, growing manufacturing and distribution businesses finance up to $500,000 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 County Corp 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 County Corp Development’s portion. This interim loan will be taken out by the BizCap loan when it funds after the borrower’s project is completed.

What is County Corp 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 County Corp Development fund its BizCap small business 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 County Corp Development
  • CDBG loans are funded from resources originally provided to County Corp Development by Montgomery County from HUD.
  • Child Day Care loans are funded from the Ohio Dept of Health and Human Services.

Typical SBA 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
BizCap SBA 504 40% 2nd up to $5M
($5.5M 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 $5,500,000

To fund the BizCap 504 portion of the loan, County Corp Development issues an Authorization for Debenture Guarantee that is fully guaranteed by the SBA and sold on the private bond market.

County Corp 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 Regional 166 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
BizCap Regional 166 40% Shared 1st up to $500,000 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 generally set to match the term offered by the financial institution.

County Corp 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 BizCap loan will finance a single use property, the down payment increases to 15%. If the project is for both a single use property being financed and 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 $15 million and whose after tax income is $5.0 million or less, on average, for the last two years.

What projects are eligible and what are the costs?

SBA 504 & Ohio Regional 166 financing are both used to acquire, construct, renovate or expand an owner occupied facility. These 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 an SBA 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 SBA 504 program 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 SBA 504 loan ranging from $50,000 to $5,000,000 ($5,500,000 when public policy goals are achieved). The senior lender loan may exceed 50% of the project total, which enables larger companies to take advantage of the benefits of the SBA 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. The BizCap Business Loan Officer 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, County Corp Development, and the SBA) with copies provided to County Corp Development as received.

Generally, the senior lender provides "interim" or "bridge" financing while County Corp 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 SBA 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 County Corp Development, we strive to be the SBA 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 lender loan
  • Meets economic development and community reinvestment goals
  • Keeps the lender 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 the BizCap staff for more information.