Massachusetts has announced a bold plan to increase the diversion and recycling of organic waste by over 350% by the year 2020. Businesses such as dairies, breweries, and other food manufacturing operations will have the opportunity to construct on-site anaerobic digestion facilities.  In addition to providing a solution for the organic waste, anaerobic digestion facilities can help businesses save on energy costs by generating clean energy.  BDC Capital can assist your business with your specific equipment financing needs.

Under contract with the DEP to manage the Recycling Loan Fund, BDC Capital provides low cost, fixed rate financing from $50,000 to $500,000 to Massachusetts-based solid waste recycling or re-use businesses.  We offer direct loans to help you comply with the new regulations.  In addition, RLF funds can be used for any other reasonable business purpose, including equipment purchases, debt refinance, and working capital.

CLICK HERE to read the press release.

Call BDC Capital today to learn more about RLF and how we can help you navigate this new state initiative.
781-928-1100
Joe Herzog ext. 109

Overview
A New England-based machine shop purchased and outfitted a new plant in anticipation of increased business from a customer which ended up falling short of expectations.  The debt service requirements of the new real estate loan and numerous equipment leases became a drain on cash flow.

Challenge:
The borrower needed funds for working capital and a restructuring of $1.5 million in capital leases.  The company’s community bank held several loans to the company but did not want to increase its exposure for this restructuring.

Solution:
With input from its accountant, the borrower turned to BDC Capital for a $1.85 million term loan to refinance the capital leases and pay down the trade.  The BDC’s new term loan reduced the company’s debt service requirements by nearly $850,000 a year.  This helped ensure a bright future for this machine shop with 60 employees while repositioning the balance sheet for future growth.

If you would like to explore ways that BDC Capital can provide innovative financing solutions for your customers or clients, call us at
781-928-1100

Is YOUR business ready to respond to the Commercial Food Waste Ban in Massachusetts?  BDC Capital Can Help!

As Massachusetts prepares to implement a plan to divert a third of the nearly 1.4 million tons of organic waste produced in the state each year, many businesses will need to acquire equipment or modify their processes to handle this waste. Beginning in 2014, hospitals, universities, large restaurants, and any business with a food production facility will be required to comply with the ban and will be barred from discarding food waste in the trash.  This may present your business with a need to finance additional equipment, storage containers, or vehicles.

Under contract with the DEP to manage the state’s Recycling Loan Fund, BDC Capital provides low cost, fixed rate financing from $50,000 to $500,000 to Massachusetts-based solid waste recycling or re-use businesses.  We offer direct loans to help you comply with the new regulations.  In addition, RLF funds can be used for any other reasonable business purpose, including equipment purchases, debt refinance, and working capital.

Call BDC Capital today
to learn more about RLF and how we can help you
navigate this new state initiative.

781-928-1100
Joe Herzog ext. 109

Case Summary:

Challenge: In April 2012, BDC Capital was approached by a banker who was evaluating the Company’s request for working capital. The company was rebuilding its business but lacked sufficient, historical profitability over the past two years to attract conventional financing. BDC Capital was familiar with the industry and felt comfortable in providing financing for this early stage turnaround.

Solution: BDC Capital responded by providing a $1 million asset-based, revolving line of credit for working capital. This fully-followed facility is collateralized with a first lien on A/R and inventory. The new working capital line has given the company substantial availability, allowing management to execute their plan of growing the business. The referring bank has landed a new client by providing lock box services and other banking services and was able to differentiate itself from its competitors by offering a viable solution to the company’s financing needs.

If you would like to explore ways to land additional business for your bank without taking on undue risk, give us a call at 781-928-1100 to explore how a partnership with BDC Capital can help.

Challenge:  A contractor specializing in renovation and restoration of residential and commercial properties needed its debt restructured.  The company was established over 30 years ago by the current owner.  Although revenues were impacted by the downturn in the economy in 2009 and 2010, revenues had rebounded in 2011 and were strong year-to-date 2012 with continued profitability.  The company had fully advanced on both its business and equipment lines of credit.  Mortgage debt that originated from the acquisition of the company’s headquarters 10 years earlier was $500,000.  This real estate recently appraised at $950,000.  The existing banker contacted CDC New England to solve its borrower’s financing needs.

BDC Capital provided a revolving line of credit for working capital, with a new bank handling all cash management requirements, a term loan for debt refinance and new capital expenditures, and a mezzanine investment to assist in the recapitalization of the company.

BDC structured a transaction that repaid the existing bank debt, provided funds for on-going working capital and increased cash flow by lowering the monthly debt service requirement. According to Bill Peters, President of Maine Trailer, “We talked with many lenders and capital providers about the right capital financing plan for Maine Trailer. BDC Capital was unique in being able to structure not only our working capital and term debt, but also the mezzanine investment that we needed to complete the recapitalization of the company.”

This program allows small businesses to take advantage of long term, fixed rate loans to refinance their higher interest or maturing real estate debt or existing debt on capital assets. Loans under the 504 Program are funded by the sale of ten-year and twenty-year bonds guaranteed by the SBA. Thus, a borrower is able to obtain attractive 20 year fixed interest rates, as low as 5.04% based on the January pricing.

With a traditional 504 loan, a bank holds the first lien position and their exposure is reduced through the Certified Development Company (CDC) which provides up to 40% (or an amount not greater than the bank) of the project cost and takes a secondary position to the bank loan. The small business borrower must either have at least 10% existing equity in the property or must inject equity of at least 10%. The amount of the bank loan must be at least as much as the 504 loan.

The bank’s first lien position, at a lowered loan-to-value ratio, makes partnering with a CDC on a 504 refinance loan a wise choice. The bank’s rates can be fixed or floating. The only stipulation is that the first lienholder loan must be for at least 10 years for a commercial real estate loan and at least 7 years for a 10-year equipment or machinery loan. The bank utilizes its own underwriting standards and sets its own terms, interest rates and fees.

While there is no maximum project size, the 504 second mortgage loan is limited to $5 million in most refinance projects just as with the traditional 504 loan. The upper 504 loan limit increases to $5.5 million for eligible manufacturing projects and energy saving technology entities.

The following are some of the primary requirements of the SBA 504 Refinance Loan Program:

• The small business must be for-profit and have a tangible net worth of less than $15 million and an after tax profit of less than $5 million for the previous two years.
• The small business must occupy at least 51% of the property at the time of the refinance application.
• The property must have been acquired at least two years ago with non-SBA commercial debt.
• The project structure must be based on the current appraised value of the collateral.
• Up to 90% of the current appraised property value may be refinanced. * Existing government-guaranteed loans are not eligible to be refinanced.

Like the traditional 504 Loan Program, the borrower may use its existing equity in the property for its 10% equity injection. The borrower is thus able to retain working capital in the business.

Should there be excess equity in the property, the small business can refinance other existing debt (including SBA Guaranteed Debt) or may use the excess equity (meaning, equity beyond the 10% minimum contribution) to obtain working capital for payment of recent or projected eligible business expenses. These expenses can include items such as rent, utilities, inventory and other business obligations.

Multiple refinancings of the original note ARE eligible. Borrowers must demonstrate that their loan is current and that they have successfully made all required payments under original or modified bank terms for the past twelve months. Such modifications of terms must have been entered into prior to October 12, 2011.

Do you have borrowers who could benefit from the new 504 Refinance Loan Program or instances where this program would benefit the bank? If yes, you can contact CDC New England for more information at 781-928-1100 or find one of our Business Development Officers in your area at www.newengland504.com

It’s important to remember to act fast; the program expires September 27, 2012, unless Congress acts to extend it.

We help you book more business.

We solve financing problems.

We reduce bank risk.

We provide innovative financing to New England businesses that might not be able to obtain all the financing needed from conventional lenders. These businesses might have a collateral shortfall, temporary losses, or high leverage. We supplement bank financing and source our funds from our 28 member banks.

Our financing includes:

• Revolving ABL lines of credit from $750,000 to $3 million;
• Direct term loans from $500,000 to $3 million, in a senior or junior secured position;
• Mezzanine investments from $1,000,000 to $5 million;
• SBA 504 loans for real estate and machinery & equipment through our affiliate CDC New England.

Contact a Business Development Officer in your area today:

Carol Brennan (WMA & CT)
20 Church St., Suite 1740
Hartford, CT 06103
office: 860-218-2912 x204
cell: 413-237-6648 cbrennan@bdcnewengland.com

Connie Karsh (Connecticut)
20 Church St., Suite 1740
Hartford, CT 06103
office: 860-218-2912 x205
cell: 203-200-7055 ckarsh@newengland504.com

Nancy Gibeau (S/SE MA & RI)
30 Exchange Terrace
Providence, RI 02903
office: 401-450-0047
cell: 508-254-7891 ngibeau@bdcnewengland.com

John Figmic (East/Central MA)
500 Edgewater Dr., Suite 555 Wakefield, MA 01880
office: 781-928-1122
cell: 617-872-1193 jfigmic@bdcnewengland.com

Ray Dugdale (ME, NH & VT)
91 N. State St.
Concord, NH 04101
office: 603-573-9650
cell: 978-270-2094 rdugdale@bdcnewengland.com

Field Rider (ME, NH & VT)
120 Exchange St., Suite 205 Portland, ME 04101
office: 207-773-3104
cell: 207-749-0322 frider@bdcnewengland.com

Carol Fleit Cipriani, SVP, Direct Term Loans
500 Edgewater Dr., Suite 555
Wakefield, MA 01880
office: 781-928-1104 cfleit@bdcnewengland.com

Stan Horsman, Director, Business Finance
500 Edgewater Dr., Suite 555
Wakefield, MA 01880
office: 781-928-1125 shorsman@bdcnewengland.com