Frequently Asked Questions
Who may borrow?
A business that is a sole proprietorship, partnership or corporation may apply for financing. The business should be a for-profit business, although non-profit corporations with assets will be considered under exceptional circumstances.
How may loans be used?
Loan funds may be used to finance a wide variety of business needs, including acquisition of real estate, machinery, equipment, and working capital.
What are the restrictions on funds?
The 503 loan funds can only finance up to 40% of eligible project costs. 100% financing cannot be provided. A bank or other lending source is required to participate in the financing needs.
The borrower is required to contribute at least 10% of the project costs.
A financed project must create or save jobs in the community.
Loan amounts are typically $7,500 to $150,000. Larger loans may be considered, depending on the project, need and availability of funds.
Additional collateral, security interests, corporate and personal guarantees may be required.
What are the benefits of 503 financing?
- Lower than market interest rates.
- Low application fees.
- Reasonable loan closing costs.
- Simple application process. your
- Approved loans can usually close within 30 days of loan approval.
- The 503 can subordinate collateral position to a bank participating in the project financing.
How do I apply for financing?
A business interested in 503 Corporation financing should first call and make an appointment with the 503 loan officer.
If a project meets the qualifications for financing consideration, the applicant will be provided a financial assistance application. Assistance in completing the application is available from the Ashtabula County Small Business Development Center and Growth Partnership for Ashtabula County.
Along with completing the financial assistance application, a business must provide three years of historical financial statements or tax returns, three years of projected financial statements, personal financial statements for the principal owner(s) of the business, information on the project and documented project costs.
The business should obtain third-party cost estimates or quotes for all items to be purchased. Estimates or quotes would be obtained from contractors, suppliers, and equipment vendors. For real estate purchases, the business should have a purchase agreement, accepted by the seller, contingent on financing and a real estate appraisal.