Micro Loan

SEED is an Intermediary Lender under SBA’s Micro Loan Program. SEED has access to $3.5 million in loan funds to assist micro businesses. These loan funds are provided by the SBA, the Commonwealth of Massachusetts and the United States Economic Development Administration.

The following lending institutions have contributed a cash match to establish the program:

• Eastern Bank
• Rockland Trust Company
• Sovereign Bank
• Webster Bank

With operating funds from the Commonwealth of Massachusetts and SBA, SEED provides technical assistance to start-up and existing small businesses.

Loan Amount
Under the Micro Loan Program, SEED provides loans up to $35,000 which can be used for working capital, leasehold improvements, machinery and equipment, furniture and fixtures and refinancing of business credit card debt.

Eligible Businesses
Manufacturing, retail, wholesale and service businesses usually having five employees or less at the time of application and meeting the definition of small business.

Geographic Coverage
The program provides assistance to small businesses in Massachusetts and Rhode Island. SEED will defer to local programs providing the same type of assistance.

Loan Term
Up to five years with options to defer principal payments, amortize over longer periods or establish seasonal schedules as needed.

Loan Rate
Generally market rate and based on an analysis of the business’ needs and repayment ability.

Loan Collateral
All appropriate business assets, personal guaranties and personal assets as necessary to collateralize the loan.

Job Requirement
The small business has to demonstrate potential for job creation or retention, especially jobs which would be available to low and moderate-income individuals. Job creation compliance will be monitored by SEED.

Management Capacity
The small business has to demonstrate management capacity and/or willingness to accept close management consultation and technical assistance throughout the life of the loan, if necessary.

Financing Gap
The small business has to demonstrate that adequate capital or loan funds to fully finance the business’ needs are not available. A micro loan can be a portion of a larger financing package in conjunction with a lending institution.

Loan Decisions
Decisions on loans will be made on the basis of the following: a small business’ need for the loan; a small business’ ability to create or retain jobs and/or provide a community service; the character and management ability of the principals; credit history of the principals; cash flow available to repay the loan; and collateral for the loan.

Process
SEED’s Micro Loan Committee meets at least once a month to approve loan applications. Normally it takes 30 days or less to obtain approval. The following is the information needed to review a loan application:

• Application Form;
• Business Plan for a start-up business;
• Statement on the use of funds (quotes, invoices, appraisals, tax assessments);
• Business financial statements and IRS returns for the past 3 years;
• Interim financial statement no older than 90 days (can be done in house);
• Projections (at least one year) including a Day One Balance Sheet for start-up businesses; and
• Personal financial statements for principals with 20% or more ownership and personal IRS returns for the past 2 years.

Fees
SEED charges a $50 application fee, plus a technical assistance fee of $100 prior to closing and closing costs (variable).

For more information, please contact Laurie Driscoll.

SEED is an equal opportunity lender and business assistance provider.