CRF Interest Rates
The CRF program works in a similar fashion to the SBA 504 loan program although unlike the 504 program, where individual loans are pooled into one big bond, and this bond funded each month, the CRF program utilizes smaller funding pools with no Federal government guarantee on the pool, so the rates to the small business borrower will be higher than under the 504 program. Colorado Lending Source has partnered with the Community Reinvestment Fund (CRF) out of Minneapolis, MN, to provide small businesses in Colorado with access to CRF financing, the same nonprofit economic development organization involved with the NMTC loan program.
Interest Rates
The interest rate to a business borrowers who secures financing under the CRF program will vary a little from borrower to borrower depending on the strength of each application. For the purposes of cash flow planning, the interest rate is typically priced at 4.40% (for a ten year term) to 4.52% (for a fully amortizing twenty year term) over the 7-year Treasury or the 10-year Treasury respectively. The term can be up to 20 years; however, the CRF term will match the bank’s term if less than 20 years (no less than 10 years on bank’s term). The amortization is 20 years. The actual rate may be fixed up to ten days prior to the planned closing.
AN IMPORTANT NOTE ON HOTEL & MOTEL PROJECTS:
Because of the fact that outside rating agencies “penalize” a CRF financing instrument if hotel and motel projects are included in the pool, CRF has reluctantly announced that effective March 2007, the typical interest rate on these sorts of projects will increase to the equivalent of the 10 year Treasury Bond rate plus 600 basis points, which is admittedly a little steep (CLS editorial comment).
To see the current 10 year Treasury rate (and in fact the 7 year rate and all the Treasury rates for every day so far this month), please click HERE (and hold your nose).
Loan Term
A CRF loan is either a fully amortizing 20 year term loan or a 10 year loan amortizing over 20 years. The CRF term will usually match the term offered by the partner bank lender. The interest rate set at closing remains in effect through the full term of the loan.
