Eligible Use of Loan Proceeds
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Land: including buildings, structures and improvements; which will be part of the project property. The value of the land and existing building will be at cost if acquired within two years of application. If owned for over two years the value may be established through a professional appraisal ordered by the bank. This is a possible form of equity for the project.
Land Improvements: examples are grading, new streets including curbs and gutters, parking lots, utilities and landscaping. Improvements financed through special tax assessments or user fees are not eligible.
Construction: A new building, renovation of an existing building or a major addition to an existing building. Eligible costs include the funds required to complete the construction and occupy the premises. If a portion of the property will be leased out to another party, then only integral parts of the construction are allowable such as façade, heating, electrical, plumbing and roofing. Costs to finish the interior space to be leased out are not eligible.
Acquisition of an Existing Building: including any applicable fees required to gain clear title to the property.
Leasehold Improvements: if the improvements have a normal useful life equal to the term of the debenture (minimum of 10 years) and the small business concern has the right to occupy the premises for the same term. The right to occupy can include renewal options if the right of renewal rests with the lessee (SBC).
Machinery & Equipment: all costs associated with the purchase, transportation, dismantling, or installation of machinery and equipment can be considered part of the project cost. If the project is for M & E only, then the M & E must have a useful life of at least 10 years.
Furniture and Fixtures: can be included only if the cost is minimal compared to the total project and will not affect the maturity based on a weighted average useful life.
Professional Fees: expenditures for professional services and fees directly attributable and essential to the project are eligible. Examples are engineering, architectural, appraisals, environmental, interest and points on the interim construction loan, impact and permit fees, utility hook-up fees.
Contingency: not to exceed 10% of the construction costs. For financing cost overruns.
Administrative Fees: not included in the project cost, but included in the debenture amount are the reserve fee (SBA), CDC processing fee, funding fee, underwriters fee and attorney closing fee.
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