Credit Criteria Used for CRF Loans
Just like the NMTC program, the CRF program is designed for established businesses with at least a two-to-three year positive track record. CRF financing is not available to startup firms, nor for working capital / purely construction loan requests.
Use of Funds
Takeout or permanent financing for businesses (including non-profits!) seeking to purchase, construct (new or expansion) buildings occupied by their businesses.
Loan size
Minimum CRF loan = $50,000 ... Maximum CRF loan = $1,000,000 (although a higher maximum loan amount may be possible for strong applicants).
Loan term
20 year amortization.
Minimum equity
10% for loans less than $500,000 (CRF portion only). Loans over $500,000 (CRF portion only) require 15% equity or some credit enhancement.
Loan Fees
An origination fee of 1.5% (CRF share) plus a one time document closing fee of $500. There are no partner lender fees (as there are with the SBA 504 loan program).
Prepayments
The prepayment penalty is 1.5% of the amortized loan balance, years 0 through 3; 1.0% of the balance, years 4 through 6; and, 0.5% of the balance, years 7 through 10.
Payments
Borrowers remit loan payments by automated debit.
Security
Loan must be secured by a second deed of trust on the real estate being financed.
Occupancy
The business involved with the application must occupy at least 51% of the real estate being financed (although exceptions may be considered in situations where occupany is less than 51%).
Management:
Managers of businesses applying for CRF financing must have at least two years management experience with the applicant firm, together with at least five years company or industry specific management experience.
Credit:
A positive credit history is required, with no company or personal bankruptcies on record for the previous ten years. At least one of the principals of the firm, who has at least a 20% plus ownership interest, must have a credit “score” of 680 or better.
Repayment Ability:
An applicant business will need to evidence an historical cash flow coverage of an average of at least 1.2 to 1.0 for the past three years, and at least 1.0:1.0 for two of the last three years.
RMA Ratios:
The tax returns and recent financial statements for an applicant business must show operating ratios that are higher than comparable NAICS RMA lower quartile ratios for (1) the current ratio; (2) days’ inventory; (3) accounts payable aging; and (4) accounts receivable aging.
Personal Guarantees:
Personal guarantees will be required of all owners with more than a 20% ownership interest in the business and/or property. Exceptions will be considered on a case-by-case basis. A corporate guarantee is required from the operating company if the borrower is a LLC or LP.
