The nonprofit South Eastern Economic Development Corporation (SEED) has been around since 1982 assisting business in southeastern Massachusetts with their capital needs as a certified lender by the U.S. Small Business Administration. Last year, the Taunton-based agency expanded its territory to include Rhode Island.
Laurie Walsh, SEED assistant vice president, commercial loan officer and business assistance manager, answered a few questions about what help SEED can provide Ocean State companies.
PBN: What lending capacity does SEED have in Rhode Island for small businesses?
WALSH: As the U.S. Small Business Administration Intermediary lender for the Rhode Island Micro Loan Program, SEED has access to a total of $3.5 million to make loans up to $35,000 for startup and existing businesses. SEED also offers the SBA 504 Loan Program to assist with the purchase of real estate and fixed assets, up to $4 million.
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PBN: How long has SEED administered the Micro Loan Program in Rhode Island and what types of business have taken advantage of the program?
WALSH: SEED has administered the SBA Micro Loan Program in Massachusetts for the past 11 years with minimal charge-offs. So far, SEED has made 322 micro loans totaling $7.2 million, and assisted in the creation of 915 new jobs.
SEED became the Intermediary for the SBA Micro Loan Program in Rhode Island in early 2009 and has financed the following businesses: Moody Machine Products in Providence; Glow Oil in Lincoln; Curves in Portsmouth; JM Painting and Plastering in Cranston; Castle Awards in East Providence; Groh Associates in Warwick; Continental Travel Agency in Smithfield; Kathleen’s Wildflower Florist in Barrington; and Newport Potters Guild in Newport.
PBN: What are the terms and conditions of the Micro Loan Program?
WALSH: Micro loans up to $35,000 are available for existing and startup small businesses including home-based businesses. The term on the loans is up to six years and the current rate is 6 percent fixed with no prepayment penalty. Loan funds can be used for working capital, inventory, machinery and equipment, furniture and fixtures, and refinancing of business credit-card debt with high interest rates.
Small-business owners need to have at least a 600 credit score and be able to explain delinquencies. Regardless of a borrower’s score, we will focus more on the past 12 months to see how debt has been handled. SEED also reviews the small business owner’s household income to see if there is enough income to repay the loan.
SEED can be flexible with repayment terms and collateral, but we expect small businesses to stand behind their loans and will take all available collateral, including a second or third position on the small business owner’s home, whether there is equity available or not.
PBN: What is the application process?
WALSH: The application process includes filling out SEED’s application form, and providing federal income tax returns for three years for the small business and the owner(s). The list of other documentation required can be found within the application form, which is available on SEED’s Web site www.seedcorp.com. The turnaround time is typically four to six weeks from submission to closing. If necessary, SEED has the capability to e-mail requests to the loan review committee to expedite the process.
PBN: Does SEED offer technical assistance to small businesses?
WALSH: Yes, we offer a free monthly entrepreneurial workshop that is designed to assist potential and existing entrepreneurs. The daylong workshops consist of two sessions.
The first is entitled “Learn the Fundamentals in Planning, Preparing, and Financing Your Business.” It is geared toward helping potential entrepreneurs evaluate and understand the fundamentals of owning one’s own business.
The second is entitled “Understanding the Purpose of Financial Statements and How They Can Help Determine the Health of Your Business.” It focuses on helping attendees understand a balance sheet, income statement and cash flow statement. The workshop also explains how a small business owner can anticipate financial needs in order to operate his/her business more efficiently.
We also work with other economic-development organizations and financing institutions in the region to ensure that individuals who are committed to owning and operating a small business are able to obtain the assistance they need to be successful.
