South Eastern Economic Development (SEED) Corporation announced today, that during the fiscal year just ended on September 30, it made 42 small business loans totaling $2 million. SEED also obtained an additional $2.6 million in capital to continue making small loans in Fiscal Year 2014. Under all its loan programs, SEED made 103 small business loans totaling $33.3 million, creating 639 new jobs, and leveraging another $50 million in bank loans and private funds.
“SEED’s small loans enable businesses to continue operating, expanding, and creating new jobs,” stated Maria Gooch-Smith, SEED’s executive director. “With the new funds received this past year, SEED will be able to continue meeting the demand for small loans up to $200,000,” added Gooch-Smith. SEED received a total of $1.3 million in grants from the U.S. Community Development Financial Institutions (CDFI) Fund and the State of Massachusetts to make small loans.
This past year, SEED also borrowed $1.25 million from the U.S. Small Business Administration (SBA) to continue making micro loans up to $50,000. Eight banks provided SEED with $52,500 in contributions to set up the reserve fund required by SBA: BayCoast Bank; Boston Private Bank; Bridgewater Savings Bank; Bristol County Savings Bank; Cape Cod Five Cents Savings; Eastern Bank; HarborOne Bank; and Middlesex Savings Bank. Rockland Trust Company also contributed $50,000 to SEED’s Business Assistance Program.
“Demand for SEED’s SBA 504 loans, which finance the purchase and improvement of business real estate and equipment in participation with the region’s banks, decreased this past year since many small businesses preferred to wait for more certain economic conditions,” explained Gooch-Smith. Under the SBA 504 Program, SEED closed on 28 loans and approved another 32 for a total of $31.2 million.
“Many of SEED’s smaller loans were made to businesses which could not qualify for conventional bank financing due to insufficient collateral, tight cash flow, start-up status, or lower credit scores, but they were viable community businesses which create jobs and are important to our region’s economy” stated Gooch-Smith.
“The SBA 504 Program is still the perfect financing option for small businesses considering the purchase of real estate since the down payment is generally only 10 percent, and the interest rate is attractively priced and fixed for 20 years,” explained Gooch-Smith. “The participating bank only has to provide 50 percent of the financing needed, while the SBA 504 loan provides 40 percent behind the bank,” added Gooch-Smith.
Gooch-Smith explained that SBA 504 loans remain a great option for banks, since they mitigate bank lending risk on commercial real estate financing. Funds for SBA 504 loans come from the sale each month of long term bonds. These bonds carry the full faith and backing of the U.S. government, and present an attractive investment option for pension funds, insurance companies and other large institutional investors.
SEED is a non-profit economic development corporation established in 1982 to assist small businesses in the region. Under various programs, SEED makes loans from a $1,000 micro loan to a $5.5 million SBA 504 loan to assist small businesses to grow and create jobs.
SEED also provides technical assistance to small businesses and works with other business organizations and financing institutions in the region to ensure that individuals who are committed to owning and operating a small business are able to obtain the assistance they need to be successful. During the past year, SEED held 34 entrepreneurial workshops attended by 439 existing and prospective entrepreneurs, and provided individual technical assistance to another 682 for a total of 1,121 individuals.
For more information about the SBA 504 Program and other SEED loan programs, please call 508-1020 or visit SEED at www.seedcorp.com.
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