Site Development

Preparing a Vision for Your Project
Developing a Marketing Plan
Developing a Proforma

Sources of Project Financing
Project Phases

Wetland Delineation & Summary Report
Environmental Site Assessments

Permit Acquisition Process
Project Delivery Systems

Data Checklist 

Sources of Project Financing

Having adequate and readily available capital is paramount for the continued success of any business. This does not just mean the money that you have accumulated as assets but that which can be obtained from outside sources when you need to use it. When you are considering making major site and building improvements, the need for available capital becomes especially critical. In addition to having sufficient money to run current operations, you must also have adequate money to pay for the design and construction of the proposed facility and still have enough for legal and other administrative support services as well as to fund the expanded future (after construction) operations.

There are numerous articles and books written regarding the manner in which a business owner must present his/her request for financing. We will not be addressing this here. However, we will focus on what outside sources of financing could be employed to meet your expansion needs.

Typically, a developer or private company that desires to build needed improvements cannot afford to pay cash to plan, construct, and operate the project. To cover the cost of acquiring land, designing and constructing the site improvements and buildings, development phase financing is needed. Such loans include the land acquisition loan and the construction loan. Lenders find this phase to be quite risky; therefore, there are a limited number of such loans made. Permanent financing is less of a concern to the lender since a first mortgage loan is made with the intention that it will be in place for some period of time.

The main sources of development phase financing include Savings and Loan institutions, commercial banks, insurance companies, the US Small Business Administration (SBA), housing authorities, state finance authorities, other government agencies, and pension funds. Sources of permanent financing in addition to those providing development loans include Mortgage Limited Partnerships, individual investors, credit companies, and the secondary mortgage market.

There are a variety of federal and state government administered programs aimed at improving regional economic development and job retention and expansion opportunities. Below is a partial listing of financing sources to assist you in your efforts to obtain funds to construct your project.

Industrial and Business Financing
There are several grant and loan programs that are used in the State of New Hampshire which are used to provide expansion capital to businesses. These include:

NH Business Finance Authority
4 Park Street, Suite 302
Concord, New Hampshire 03301-6313
(603) 271-2391

NH Industrial Development Revenue Bond Authority or "IRB"
Manufacturing (as described under the US Internal Revenue Code) firms are eligible for tax-exempt financing. Funds obtained through this program are for land acquisition, the purchase of buildings, expansion/improvements, equipment, and machinery. Such money can also be used for development and financing costs and the fees charged by a bond counsel. The maximum dollar limit is $10 million for any one project. The level of participation can be up to 100%. To apply, one needs to make a reservation of the bond amount. A preliminary approval is required before an expenditure commitment is made.

Loan Guarantee Program (SBA/BFA)
To utilize this program the applicant must meet certain requirements established by the US Small Business Administration (SBA). This loan guarantee cannot be greater than 90% of the original principal amount minus the "7a" SBA program eligible amount. Funds obtained through this program are for real estate, expansions, equipment, and working capital. Interest terms are negotiable with the participating bank. The loan guarantee cannot exceed $1.5 million. An application prepared by the business and the bank needs to be first submitted to the SBA. A Certification of Approval is issued by the SBA to the BFA. Your bank then submits a copy of the application to the BFA. You then must obtain approval from the BFA, with final authorization to be obtained from the Governor and the state's Executive Council.

NH Community Development Finance Authority (CDFA)
14 Dixon Avenue, Suite 102
Concord, New Hampshire 03301
(603) 226-2170

Seed Capacity Grants
This program is designed to assist economic development organizations to maintain and increase their capacity throughout the areas in which they operate. The basic elements of this program are:

  • Capacity building for regional, mature economic development organizations. Limited amount of funding to be made available for local economic development programs, in hopes that they will forge regional relationships with similar organizations.

  • Competitive grants of up to $15,000 for regional organizations. One-time planning grants of up to $2,000 for local organizations.

  • Requires participation in economic development network, sponsored by CDFA.

  • Annual awards based on application process, strategic and business plan development, network participation, and meeting objectives set during previous years.

  • Funding established at $150,000 for the first year.

CDFA is prepared to make a five-year commitment to this program because it will take that long for many of the organizations that we expect to fund to achieve a measure of self-sufficiency.

NH Business Development Corporation
1001 Elm Street
Manchester, New Hampshire 03101
(603) 623-5500

SBA "7a"
This is a program that has the same eligibility requirements as the Loan Guarantee Program described above. Funds obtained through this program are for real estate, building and plant expansions, equipment, and working capital. Interest rates are Prime plus a surcharge. This program has a dollar limit range of $50,000 to $750,000 with a level of participation up to 90%. The approval is based upon your ability to service the loan.

US Small Business Administration
Stuart Nelson Plaza
143 N. Main Street
P.O. Box 1257
Concord, New Hampshire 03301
(603) 225-1400Currently the most popular SBA loan programs include:

Small Business Administration 504 Loan Program
The purpose of this program is to provide long-term financing of fixed assets and to stimulate local economic development activity in the form of an increased number of jobs. Eligible uses of such funds include the purchase, construction, or the improvement of fixed assets with a useful life of at least 10 years including real estate (land and buildings), machinery, and equipment. It also can cover professional fees (legal, engineering/architectural, accounting), appraisals, environmental site assessments, interest on interim financing, and contingencies. The participation limit is up to 40% of the project cost. (Note: The 504 loan amount can increase to $1 million if the project or business qualifies in one of the following ways: minority-owned business; located in a rural area as defined by the SBA; manufacturing facility or advancement of technology; company must make changes due to regulatory environmental compliance; financing will assist in expansion of exports; business district revitalization; changes necessitated by federal cutbacks.)

Basic criteria for eligibility:

  • History of profitability and reinvestment in the company
  • Must create or retain jobs or satisfy other defined economic development objectives
  • Owner-occupied financing
  • For profit company
  • Financing needs must be used for long-term fixed assets
  • New financing (no refinancing or debt restructuring)

    Application is made through a Certified Development Company (CDC) that serves the geographic region where your project is located. A CDC is certified by the SBA and will work directly with you to create a financing package that meets the program's guidelines. Other non-certified development corporations will work with CDCs to help you secure financing. The SBA then reviews and approves the loan. Debentures are then issued which are 100% guaranteed by the SBA. It should be noted that Congress is considering changing or eliminating this program. Contact your local CDC for more information.

Commercial Mortgage Loans
For the purchase, new construction, or refinance of commercial properties and account for the largest volume of SBA loans. The property must be "owner-occupied." In other words, your business must occupy at least 51% of the space if it is an existing facility or two-thirds if it is new construction. The balance of the space can be leased to third parties. This program is very popular for three reasons: (1) loan terms can be up to 25 years with no balloon provisions (as is customary with conventional loans); (2) the amount financed can be as much as 90% and occasionally higher (versus 70-75% on a conventional basis); and (3) the loan can be assumed by an SBA-eligible borrower.

Equipment Term Loans
Available for the purchase or refinance of virtually any type of business equipment from printing presses to computers. The amount financed depends upon the resale market for the equipment. The repayment term is matched to the depreciate life of the equipment, which can be as long as 10 years. Most conventional bank loans are limited to 36 - 60 months.

Permanent Capital Term Loans
This loan is the most popular with start-up businesses, which includes franchises. The proceeds can be used for general operating purposes or to carry accounts receivable and inventory during a high-growth phase. The loans are generous with a seven-year repayment term that is only available because of the SBA guarantee.

Green Line Program
A new product from the SBA that provides a short-term working capital line of credit. A credit limit is established from which the company can borrow, pay down, and re-borrow. It is an "asset-based" line where availability is based upon a percentage of accounts receivable and/or inventory. This program is ideal for government contractors and professional service firms. The term for the line of credit can be up to five years. Most conventional lines of credit are established on a demand basis or one-year term, at the most.

Low Doc Program
The latest innovation from the SBA in an effort to become more user friendly. Under this program, the participating bank does not have to submit all of the financial data to the SBA for analysis and review. Rather, the borrower completes a one-page application, and the bank completes a one-page analysis of the request. The SBA relies heavily on the bank's analysis and processes these loans quickly, usually within 48 hours. All of the traditional SBA loans can be processed under this program as long as the amount is less than $100,000. The Green Line is the only type of loan that cannot be done on a "Low Doc" basis.

Successfully Obtaining an SBA Loan
The key is being prepared and finding the right lender. Know your needs and be able to explain how you arrived at the amount you are requesting. A successful loan application package will adequately provide a financial history of the business. It will also include a narrative background on the company, the principals, and what the future holds. Personal financial statements and tax returns for the owners will be required. Most important are projections that include monthly cash flow projections listing the critical assumptions.

Where to Get an SBA Loan
Local banks and other select commercial financial firms ("approved lending source(s)" "(ALS)") comprise the distribution system for SBA loans. Not every ALS is the same and/or automatically fits your needs. For example, the SBA Green Line is currently only available through certain local banks approved for that purpose.

Find an ALS that is familiar with your local or regional industry and/or is willing to take the time to learn. Choose an ALS that has an established track record in the SBA product which best matches your firm's financial needs. Choosing the correct mix of capital and the best type for your business is an important factor to evaluate.

Timing is also important in the choice of an ALS. You do not want to be the first SBA loan from this ALS. Processing might take months. A preferable ALS should be able to move even the most complex transaction through the process in 3 to 4 weeks. Last, developing the SBA loan package offers a very good opportunity to develop a lasting banking relationship with the ALS - a key factor in your firm's long-term business success and growth.

There are basically three different types of SBA lenders. A Preferred Lender is one that can make some loan decisions without the SBA's approval. A Certified Lender gets priority processing from the SBA. A General Lender is one that is licensed with commercial lending experience. For a sample list of participating lenders, contact the SBA District Office.

A Certified Development Company that serves your community can work directly with you to create a financing package that meets the program's guidelines. If you register with us, we can provide you with a list of Certified Development Companies.

U.S. Rural Development - Formerly Farmers Home Administration (FmHA)
501 South Street
Bow, New Hampshire 03304
(603) 226-9331
(603) 226-9338 -- fax

Water and Waste Water Disposal Loan Program
This program provides funding to communities for water and sewer projects. Priority for the funding in Rural Development's programs is given to those projects with median household incomes below the statewide median household income. A list of community median incomes can be obtained by contacting the Rural Development offices directly. The Northeast Rural Water Association provides additional information at their web site:

Eligibility for grants is based on both median income levels and the resulting user rates after the system is approved. If rates will be excessive, grant funds may be available to reduce the loan and the resulting user rates.

Applications for funding are typically filed when the preliminary engineering is completed and project costs are defined. Rural Development has published a proposed "streamlining" of its regulations which it expects to be final in early 1997. Some key changes in the program include a reduction in the maximum grant from 55% to 45% for communities with median incomes between 80-100% of the statewide median household income. Maximum grants for poverty-level communities remain at 75% (subject to availability of funds). The pre-application has been eliminated, and preliminary engineering reports must be submitted as part of the application. Changes were also made to comply with the 1996 Farm Bill. These include requiring a qualifications-based request for proposals process for the selection of engineers. The authorized SDWA amendments will provide states with funds to establish state revolving funds (SRFs) for drinking water.

Rural Housing Site Loans
This program is available to public or private local nonprofit organizations with legal authority to buy, develop, and sell homesites to eligible applicants. These loans are for financing building sites which may be developed into desirable residential communities. The sites must be in rural areas and must be sold on a nonprofit basis. Rural areas include open country or a population of 10,000 or less that are rural in character. Loans may be made in towns with populations between 10,000 and 20,000 that are outside of standard metropolitan statistical areas. The Secretary of Agriculture and the Secretary of Housing and Urban Development can determine if there is a serious lack of mortgage credit.

Section 523 sites are for housing to be built by the self-help method. Section 524 sites have no limitation on the method of home construction.

  • Repayment is expected within two years.
  • The interest rate for Section 523 loans is three percent.
  • The interest rate for Section 524 loans is determined annually.

Business and Industrial Loan Guarantees
This program is available to any legal entities including individuals, public and private organizations, and federally-recognized Indian tribal groups. FmHA is aimed at upgrading the economic environment and in doing so will make a material contribution to better living. This program of loan guarantees furthers business and industrial development. Business and industrial guaranteed loans can be made in any area outside the boundary of a city with 50,000 or more or its immediate adjacent urbanized areas with population density of no more than 100 persons per square mile. Priority is given to applications for projects in open country, rural communities, and towns of 25,000 and smaller.

This is provided in the form of a loan guarantee as to whereby the agency contracts to reimburse the lender of losses up to a maximum of 90% of principal and interest for guaranteed loans of $2 million or less, 80% for loans over $2 million but not over $5 million, and 70% for loans over $5 million.

Priority is given to projects in areas of high unemployment, to projects which show a low amount of investment per job created or saved, and to projects that will employ members of displaced farm families.

Insurance Companies
Insurance companies fund commercial real estate transactions either directly with regional or local offices or a correspondent system using commercial mortgage bankers or local brokers. Most maintain offices in major metropolitan areas throughout the country and/or have field staffs which will visit the areas frequently. These firms are tailored to deal directly with the borrower. Currently, the bulk of the transactions are handled through a correspondent network of local mortgage banking companies that will represent their lending interest in a particular area. Finally, there is the local broker who is familiar with both the current real estate conditions as well as the lending climate, and can efficiently package and process the borrower loan needs.

When pursuing an insurance company end loan through any of the above sources, the borrower must be cognizant that the process may be lengthy and involve support costs. An average commercial loan can take 60 days from application to commitment, and another possible 60 days to close. Typical fees range from 1.0% - 2.0% (points) of the loan amount plus closing and incidental costs which can run between .25% - .50%. Although initially such costs may seem significant, over the life of the loan they are relatively small.

When preparing any commercial real estate package, regardless of funding source, a number of items should be properly organized prior to discussing the matter directly with the source:

  • Income and expense statement for the property reflects solid income stream;
  • Assemble a solid tenant profile (quality and lease commitment) with a copy of all leases;
  • All financial statements on the borrowing entity;
  • Financial statements on all principals associated with the owning entity;
  • Property appraisal, if available; and
  • Complete plans and survey of the property, if available.

Upon assembly of these basic materials, the funding source will review the information and inspect the project to gauge initial investment risk in the transaction. This process typically requires several weeks. If dealing with an insurance company directly, the borrower will be provided a quote based on the interest of the particular institution. If dealing with a mortgage banker or broker, contacts to several insurance companies may be made to acquire quotes (rate, term, and dollar amounts). The borrower may then choose between the several options before signing a specific application for funding.

Certified Development Corporations

New Hampshire
Concord Regional Development Council
PO Box 664
Concord, NH 03302-0661
(603) 228-1872

Granite State Economic Development Inc.
126 Daniel Street
Portsmouth, NH 03801
(603) 436-0009

Northern Community Investment Corporation
PO Box 396
St. Johnsbury, VT 05819
(802) 748-5101

Tri-County Economic Development Corporation
(Associate of Granite State Economic Development, Inc.)
889 Elm Street
Manchester, NH 03101

Central Vermont Economic Development Corporation
National Life Drive, 5th Floor
PO Box 1439
Montpelier, VT 05601-1439
(802) 223-4654

Vermont 503 Corporation
58 East State Street
Montpelier, VT 05602
(802) 828-5627

Northern Community Investment Corporation
PO Box 904
St. Johnsbury, VT 05814-0904
(802) 748-5101

Regional and Local Revolving Loan Funds
Finance Clearinghouse
Department of Resources and Economic Development
Office of Business and Industrial Development
(800) 204-5000

Many local and regional revolving loan funds exist throughout New Hampshire. These funds have been capitalized from a variety of services, many with federal monies. The administration of these funds is generally a nonprofit corporation, while the local funds most often are overseen by governing bodies with the help of a loan committee. The loans may be used in conjunction with other sources to leverage additional monies or independently finance the project.

Drinking Water State Revolving Loan Fund (SRF)
This program consists of grants and loans to further the health protection objectives of the Safe Drinking Water Act (SDWA). A total of $9.6 billion is authorized for FY95-2003. One percent of this amount will be issued to each state until 1998. After 1998, the allotment will be based on a needs survey. States must prepare an "intended use plan" for the funds and must contribute an amount equal to 20% of the federal contribution.

Like the Clean Water Act SRF, the Drinking Water SRF will have capitalization grants, and these may be used for nonconstruction projects, particularly as related to source water protection, state prevention programs, and water systems management. However, priority must go to projects that:

  • Address the most serious health risks;
  • Are needed for compliance with the SDWA; and
  • Prioritize needy systems based on household affordability criteria.

The EPA may withhold funds from states if they:
  • Do not have the authority to ensure that new community water systems have the technical, financial, and managerial capacity to meet regulations;
  • Do not assist systems in developing this capacity;
  • Have not adopted an operator certification program; or
  • If they lose their primacy.

The EPA is also authorized to provide initial funding for university-based environmental finance centers that will provide technical assistance to public water systems. Grants to universities may also be made to establish and operate small public water system technology assistance centers.

Contact the office nearest you to obtain additional information:

Industrial Development Department
Dennis M. Cote, Director
City Hall Main Street
Berlin, NH 03570
Belknap County Economic Development Council
Eliza Leadbeater, Executive Director
County Court House, 64 Court Street
Laconia, NH 03246
Sullivan County Economic Dev. Council
Susan Elder, Executive Director
52 Tremont Square
Claremont, NH 03743
Center for Economic Development
Walter Warren, Executive Director
188 Main Street, City Plaza
Nashua, NH 03060
Economic Development Department
Kenneth Lurvey
City of Concord
41 Green Street
Concord, NH 03301
Mt. Washington Valley Business Development Corp.
Gerald I. Coogan
PO Box 1435
North Conway, NH 03860
Derry Development and Preservation Corp.
Ronald C. Hilfiker, Executive Director
PO Box 794
Derry, NH 03038-0794
Monadnock Business Ventures
Larry Ross, Director
PO Box 43
Peterborough, NH 03458
Dover Industrial Development Authority
City of Dover
Executive Director
288 Central Ave.
Dover, NH 03820
Office of Community Development
Economic Director
Rochester City Hall, 31 Wakefield Street
Rochester, NH 03867-1917
Keene Industrial Development Corporation
Jack Dugan, Executive Director
PO Box 6220
Colony Mill Market Place
Keene, NH 03431
Planning & Economic Development
City of Somersworth
Michael Parda
157 Main Street
Somersworth, NH 03878
Connecticut River Development Corporation
John Stahura, President
28 River Street
Windsor, Vermont
Addison County Economic Development Corporation
William Kenerson, Executive Director
2 Court Street
Middlebury, Vermont
Bellows Falls Area Development Corporation
James Saudade, Executive Director
PO Box 652
Bellows Falls, Vermont
Bennington County Industrial Corporation
Chris Hunsinger, Executive Director
Walter Street, PO Box 357
North Bennington, Vermont
Brattleboro Development Credit Corporation
Francis Walsh, Executive Vice President
Cotton Mill Hill, PO Box 1177
Brattleboro, Vermont
Chester Economic Development Corporation
William Dakin, Jr., Secretary
PO Box 499
Chester, Vermont
Cynosure, Inc.
C. Harry Behney, President
60 Main Street, PO Box 785
Burlington, Vermont
Economic Development Council of Northern VT, Inc.
Connie Stanley-Little, Executive Director
155 Lake Street
St. Albans, Vermont
Fair Haven Development Corporation
David Mallory, Director
Fair Haven, Vermont
Franklin County Industrial Development Corporation
Timothy Soule, President
2 North Main Street, PO Box 1099
St. Albans, Vermont
Greater Burlington Industrial Corporation
C. Harry Behney, President
60 Main Street, PO Box 766
Burlington, Vermont
Green Mtn. Economic Development Corporation
Peter Markou, Executive Director
PO Box 246, Suite 311, Gates-Briggs Bldg.
White River Junction, Vermont
Jay Area Industrial Park
Harold Haynes, Secretary/Treasurer
North Troy, Vermont
Lake Champlain Islands Chamber of Commerce & Development Corporation
Barbara Mooney, Executive Director
PO Box 213
North Hero, Vermont
Lamoille Economic Development Corporation
Christopher D'Elia, Executive Director
PO Box 455
Morrisville, Vermont
Ludlow Development Corporation
Dean Brown, Jr., President
PO Box B
Ludlow, Vermont
Manchester Development Corporation
Walter Hersom, President
PO Box 365
Manchester, Vermont
Orleans County Development Corporation
Chester Greenwood, President
522 Sias Avenue
Newport, Vermont
Precision Valley Development Corporation
Robert Mitchell, President
100 River Street
Springfield, Vermont
Randolph Community Development Corporation
Jeff Staudinger, Executive Director
PO Box 409
Randolph, Vermont
Rutland Economic Development Corporation
David O'Brien, Executive Director
256 North Main Street, PO Box 39
Rutland, Vermont
St. Johnsbury Development Corporation
William Costa, Jr., President
PO Box 219
St. Johnsbury, Vermont
The Fund (Nonprofit Development Finance Agency)
Gene Hallman, Executive Director
155 Lake Street
St. Albans, Vermont

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