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Content provided by the Catalog of Federal Domestic Assistance
59.041 Certified Development Company Loans (504 Loans)

FEDERAL AGENCY:

SMALL BUSINESS ADMINISTRATION

AUTHORIZATION:

Small Business Investment Act of 1958, as amended, Title V, Section 504 and 505, Public Law 85-699, 15 U.S.C. 696; Public Law 100-590.
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To assist small business concerns by providing long- term, fixed-rate financing for fixed assets through the sale of debentures to private investors.

TYPES OF ASSISTANCE:

Guaranteed/Insured Loans.
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USES AND USE RESTRICTIONS:

Loans are to assist small businesses in the acquisition of land and buildings; the construction, expansion, renovation or modernization of buildings; or the acquisition and/or installation of machinery and equipment. Loans may have either a 10 or 20-year term.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   Certified Development Companies (CDCs) package, close, and service these SBA-guaranteed loans to small businesses. A CDC must be incorporated under general State corporation statute, on a nonprofit basis, for the purpose of promoting economic growth in a particular area.

Beneficiary Eligibility:   Small businesses must be independently owned and operated for profit. More specific criteria defining a small business are established by the Small Business Administration. Refer to 59.012 for general eligibility requirements. Size standards can be those of 59.012 or not-to-exceed $6 million net worth and $2 million net profit (averaged over 2 years).

Credentials/Documentation:   To become a Certified Development Company (CDC), the applicant should include the following information: (1) Name and address of applicant; (2) type of CDC, State or local; (3) area of operation; (4) list of members or stockholders with address, occupation and telephone number; (5) list of officers and directors; (6) SBA Form 1081 on all officers, directors, and staff; (7) certified statement that no member or stockholder controls more than 10 percent of the voting control; (8) resume' on each officer and director; (9) the name of each individual who provides the CDC with the professional staff capability; (10) if contracted out, a copy of the contract is required to be submitted to SBA; (11) proof of compliance of representatives from the following groups; local government, private sector lending institution, community organization and business concern; (12) an organization chart and operating plan; (13) a flow chart on the CDC (evaluating, packaging, processing, closing and servicing functions); (14) address and description of the place of business, telephone number and financial statement; (15) the CDC's charter and certified by-laws; (16) articles certified by the State; and (17) a resolution of the Board of Directors certified by a corporate officer in which a company resolves to become a CDC, naming the person who is authorized to execute all documents.

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APPLICATION AND AWARD PROCESS:
Pre-application Coordination:   Approval by a Certified Development Company. This program is excluded from coverage under E.O. 12372.

Application Procedure:   Application must be made on SBA Form 1244 and requirements set forth thereon must be fully complied with by the Certified Development Company and the small business being assisted.

Award Procedure:   Applicant is notified in writing by the SBA Office.

Deadlines:   None.

Range of Approval/Disapproval Time:   Within 10 working days after formal acceptance of application.

Appeals:   Requests for reconsideration of a declined loan will be granted at any time within 6 months from the date of decline, providing that reasonable evidence is submitted to substantially overcome the stated reasons for decline.

Renewals:   Not applicable.

ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:   Generally at least 10 percent of the project cost must be injected by the small business concern and 50 percent of the project cost must be provided by a private lender.

Length and Time Phasing of Assistance:   Not applicable.

POST ASSISTANCE REQUIREMENTS:

Reports:   Annual financial, management and operating reports from the Certified Development Company.

Audits:   Small Business Administration has the right to conduct an audit of the books of the Certified Development Company and the small business concern at its discretion.

Records:   During the term of the loan, both the Certified Development Company and the small business concern assisted must maintain financial records and information adequately reflecting all transactions and results of operations.

FINANCIAL INFORMATION:

Account Identification:   73-1154-0-1-376.

Obligations:   (Guaranteed Loans) FY 01 $1,779,000,000; FY 02 est $3,000,000,000; and FY 03 est $3,500,000,000.

Range and Average of Financial Assistance:  
No Data Available.

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PROGRAM ACCOMPLISHMENTS:
During fiscal year 2001, 4,847 loans were approved through the 504 Development Company Program for a total gross dollar amount of $1.77 billion.

REGULATIONS, GUIDELINES, AND LITERATURE:

SBA Rules and Regulation, Section 120.800 and 120.900; Certified Development Company Program - Program Guide.

INFORMATION CONTACTS:

Regional or Local Office:  
See Regional Agency Offices. Initial contact should be directed to the local District Offices (https://www.sba.gov/tools/local-assistance/districtoffices) listed in Appendix IV of the Catalog of Federal Domestic Assistance under Small Business Administration.

Headquarters Office:  
Linda Reilly 409 3rd St., SW 8th Floor, Washington, District of Columbia 20416 Email: linda.reilly@sba.gov Phone: 202-205-9949

Web Site Address:  
http://www.sba.gov/

EXAMPLES OF FUNDED PROJECTS:

Not applicable.

CRITERIA FOR SELECTING PROPOSALS:

Not applicable.

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