SCORE Small Business Blog

Finance: Alternate Source of Money

We’re all familiar with the SBA 504 loan program – second lien loans for small businesses acquiring their own facilities. Offered through certified development companies around the country (cdc’s), the 504 program provides up to 40% of total project cost (acquisition, renovation/construction, and soft costs) with a bank or other lender providing 50% in first lien position and the business injecting 10%.

What happens when a deal is ineligible for a SBA 504? Occupying less than 51%; all 20% owners can’t guarantee; the business exceeds SBA size standards… Well – there is an alternative solution – the Community Reinvestment Fund- a forty five year old community development organization which has created a look-alike program to SBA 504. It provides up to 40% of the project cost in second lien position (up to $2.5 million) with borrower putting in just 10%. In addition to financing small businesses including those ineligible for SBA 504, the fund can provide money to not-for-profits acquiring their own facility. The fund can be used to refinance! If the small business or nonprofit owns a building,condo, coop and wants to refinance its mortgages or take equity out for operations, CRF can help. The loans are made through SBA CDC’s as intermediaries. For information about CRF or access to this loan fund, see for a list of CDC’s active in the program.

-Roz Goldmacher, guest blogger

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