5/6/2015. Business Financing Alternative Lending Sources. May 2015

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1 5/6/2015 Business Financing Alternative Lending Sources May 2015

2 MassDevelopment works with businesses, nonprofits, and local, state, and federal officials and agencies to strengthen the Massachusetts economy. Through these collaborations we help create jobs, increase the number of housing units, eliminate blight, and address factors limiting economic growth including transportation, energy, and infrastructure deficiencies. Both a lender and developer, the Agency s staff works with privateand public-sector clients to stimulate economic growth.

3 2013 MassDevelopment Why Alternative Lending Sources? History of Losses/Highly Leveraged Start-Up or Pre-Cash Flow Business Unable to Qualify for Conventional Loans High Risk Business or Industry Current Economic Conditions Little or No Equity Not Ready for Prime Time 3

4 2013 MassDevelopment Role of Alternative Lending Sources Fill the Gaps and Holes Provide Access to Capital Supplement and Complement Conventional Lending Sources Provide Credit Enhancement to Lenders Bridge to Conventional Financing Establish Payment History and Track Record 4

5 2013 MassDevelopment Alternative Lending Sources in MA MassDevelopment Massachusetts Life Science Center Massachusetts Growth Capital Corp. Mass. Capital Resource Corporation BDC Capital Mass. Technology Development Corporation Massachusetts Clean Energy Center State Infrastructure Grants (MassWorks and MORE Grants) and Workforce Dev. Grants 5

6 2013 MassDevelopment Federal Alternative Lending Sources Small Business Administration: - SBA 7(a) Guaranty - SBA 504 Program - SBIC s (eg. BDC Capital Corp.) USDA Loan Guarantees (Rural Communities Only) HUD Loan Guaranty Programs (Sections 108 & 202) 6

7 How Can MassDevelopment Help You Grow Your Business? MassDevelopment, as the State s Finance and Development Agency, fosters real estate and business projects that generate economic benefits for local communities and the state as a whole. Eligibility: Corporations, RE Trusts, LLCs, LLPs, 501(c)3 Corps and Sub Chapter S Corps All Eligible Primarily a Fixed Asset Lender $100,000 to $5MM for Direct Loans Up to $2,000,000 for Loan Guarantees Businesses Must be Located in Massachusetts Must Be Some Level of Public Purpose Benefits

8 Predevelopment Financing: Predevelopment loans can be used to finance early stage project costs, such as architectural and engineering work or traffic and feasibility studies, which are necessary to advance a project to the construction stage. MassDevelopment also administers the State s Brownfields Redevelopment Fund. The Brownfields Redevelopment Fund was created in 1998 to encourage the reuse of brownfields in Economically Distressed Areas (EDAs) throughout Massachusetts.

9 2013 MassDevelopment Predevelopment and Brownfields Financing: Predevelopment Loans up to $100,000 Deferred Interest Payments The Borrower is Required to Provide a 50% Match for these Loan Funds. Brownfields Assessment Loans Provide Interest- Free Financing of up to $100,000 Per Redevelopment Site for Environmental Testing. Brownfields Remediation Loans Provide Low- Interest Financing of up to $500,000 for Environmental Clean-Up. 9

10 Manufacturer Financing: MassDevelopment continues to work with manufacturers of all sizes to finance manufacturing facilities and equipment and provide export financing to access global markets. We offer financing options for projects from the predevelopment stage through permanent financing at preferential interest rates to manufacturers. Working Capital Loan Guaranty Program for Manufacturers Manufacturing Innovation Grants

11 2013 MassDevelopment New Manufacturing Innovation Grants Massachusetts manufacturers with 100 or fewer employees have access to discounted services at designated Innovation Centers for access to expertise and equipment for product development, prototyping, scale-up, cost reduction, and other services. The Innovation Centers have been chosen for their technical expertise and experience working with manufacturing companies. MassDevelopment will pay the lesser of 75 percent or $75,000 of the cost of a contract between a manufacturing company and the Innovation Center of its choice. Companies will pay the remaining amount. Companies will contract directly with their chosen Innovation Center listed below: Algonquin Industries, Inc. Contact: Edward J. Freitas efreitas@algonquinind.com Boston Engineering Corporation Contact: Mark Smithers innovationcenter@boston-engineering.com Connecticut Center for Advanced Technology, Inc. (CCAT) Contact: Don Balducci dbalducci@ccat.us Worcester Polytechnic Institute (WPI) Contacts: Walter Towner and Toby Bergstrom innovate@wpi.edu

12 Business Growth Financing: If growing your operation is a goal, you can benefit from a loan or guarantee from MassDevelopment. Our low rates and flexible terms will help you stay competitive in your field. By providing financial and technical assistance, MassDevelopment fosters real estate and business projects that generate economic benefits for local communities and the state as a whole. Real Estate Loans Equipment Loans Mortgage Insurance Guarantees Green Loan Program Exporter Financing Tech Dollars for Non-Profits

13 2013 MassDevelopment Real Estate Loans can be used to fund facility acquisition, renovation, construction, and permanent financing. Our real estate loan program offers: Loans or bank loan participations up to $5,000,000 Construction loans, usually made in partnership with another lender Permanent financing loans Multi-tenant, mixed use, commercial, industrial Manufacturers, small business, non-profits Rental housing apartment buildings For owner-occupied real estate, loan advance rates up to 90% of the property value Mortgage Insurance Guarantees can provide a guarantee on a portion of a bank real estate loan or tax-exempt bond that covers the difference between a bank s maximum allowable loan advance rate and up to 90% of the property value, thereby increasing the amount of financing available to your business. Loan guarantees up to $2,000,000 Loan advance rates up to 90% of the value of the real estate Guarantees are also available for charter school loans, tax-exempt bonds, loans to companies that export products to international markets, and working capital loans to manufacturers. 13

14 MassDevelopment Wants to Help Your Business Succeed and Grow in Massachusetts! Contact Us: MassDevelopment Central Region: 89 Shrewsbury Street Worcester, MA (508) Kelly Arvidson, Business Development Roy Angel, Direct Lending Shyla Matthews, Community Development Robert Seega, Investment Banking