Good morning it’s very exciting to be talking with creative folks about funding your efforts to improve your operations with renewables and energy efficiency. Self-Help is a mission-driven community development lender. We have over a 30 year track record in North Carolina, and now we also work nationally. We’ve built up a track record in lending to sustainable projects and businesses in lots of sectors: from small recycling businesses to multifamily housing to large solar farms. Here’s a organic food distribution hub in Durham.
The way we provide financing is through business loans. We’ve learned in our energy lending over the past years about what seems to work for different types of borrowers Today we’ll share with you what the Self-Help loan application process looks like and what makes a project “lendable” from our perspective We’ll talk about how renewable energy and energy efficiency fit in & share some examples
We look at good loans from for profits, non profits, congregations, and real estate project developers.
Our clients use financing for a wide range of commercial purposes
Note: Best for loans between $15K and $25K Start up loans usually fall into this category.
Good solid experience in the business industry Personal investment in the business Collateral to help secure the loan Relatively good credit Solid business plan with good historical and/or projected cash flow Term and interest rate vary based on project
SBA Guarantee Must meet Lender’s basic criteria 50% to 85% guarantee, depending on product Must be US citizen – and for profit USDA Guarantee Up to 90% guarantee Must be in a rural community w/ population of 50K or less Can be non profit or for profit.
We will not base this loan on the future cash flow of the start up – we will look at
Historical and projected DSCR should be 1.2
DSCR of 1.2
DSCR: For every dollar you owe, you make $1.20. SBA 504 – for some situations, we may refer you up to the SBA 504 team. You have experience, you have another bank willing to come in. We will refer you to the 504 program. If you qualify, may entitle you to a lower down payment.
Business Lending at Self Help Credit Union
Presented by Jennifer Sherwin
Who is Self-Help?
Community Development Financial Institution
Mission: provide ownership and economic
opportunity for all, especially people of color,
women, rural residents, and low-wealth families
What will be covered
Overview of our loan products
Who we fund
For Profit Businesses
Non Profit Businesses
What purposes we fund
New and used vehicles
Business space up-fit
Real Estate Purchase
What loan programs does
Simple Business Loans for business vehicles
and loans up to $15,000
Micro Business Loans $15K-$35K
Business loans > $35,000
Simple loans for vehicles and
operational loans ≤ $15,000
Loans can be secured with cash, vehicle,
Unsecured loans available up to $7,500 for
Criteria for simple business loans
Will be looking that your current source of
income can cover this loan payment.
Businesses with 2-year track record.
Start-ups w/secondary source of income.
Must have good personal debt to income.
Credit will determine the interest rate.
Micro business loans up to $35K.
Looks at current source of income as means to pay for
Must have relatively good credit
Must be well secured with real estate or cash
If a start-up - need another source of income
Existing business - need 2 years tax returns w/profit in
Fixed, 9.75% interest rate – over 3-5 year term
Criteria for loans > $35K
The five “Cs”
– Character/Management experience
– Capital/Owner’s investment
– Cash Flow
– Credit History
Other: Personal Debt to Income and Secondary Source of
Must be US citizen
Can only be used on For-Profit Businesses
Must be lender’s basic underwriting criteria
SBA provides lender a 75%-85% guarantee
Interest and term – varies based on loan
In addition to lender fees, borrower pays 2%-
3% fee on the SBA’s guaranteed portion.
SBA 504 loans
Large capital purchases only, usually real estate.
Requires partnership with another lender
Less down payment than traditional loans
– 10% if existing business
– 15%-20% if new business
Structure: bank will do 50%; borrower 10%-20%
and SBA 504 30%-40%
Rates: fixed interest rate over 10-20 year term
$7K working capital for a barber
Borrower’s spouse will co-sign and has
secondary source of income.
Borrowers have minimal personal and
Borrowers have decent credit.
Borrowers qualify for unsecured simple
$20K for a small delivery van for
Owner has 2 yrs. of tax returns showing a profit
Owner has good credit and low debt/income
Vehicle qualifies for our Simple Loan product
Interest and term will depend on age of vehicle
and personal credit.
$75K for equipment for existing
computer consulting business
Borrower has fairly good credit.
Business has been profitable and cash flow
shows can handle this additional debt.
Has $30K of real estate collateral to pledge.
Lender uses SBA 7a to guarantee loan.
Rate: Prime + 2 variable rate over 5 years.
$800K to purchase and renovate
space for an existing restaurant.
Borrower meets lender and SBA 504 underwriting
Borrower puts down $80K (10%).
Other lender does loan for $400K (50%)
SBA does loan for $320K (40%)
Center for Community Self-Help