As a designated lender under the U.S. Small Business Administration (SBA) Micro Loan Program, South Eastern Economic Development Corporation (SEED) is the leading micro lender in Southern New England. In fact, SEED has made 26 micro loans in Rhode Island since 2009, totaling $758,000 and creating 64 jobs.
The SBA Micro Loan Program provides loans up to $50,000 for start-up and existing small businesses, including home-based businesses.
"We are very pleased to be able to assist small businesses in Rhode Island to start-up, grow and create jobs," stated Maria Gooch-Smith, SEED's executive director. "As a non-bank community lender, SEED can make small business loans, which a bank might not be able to make, such as loans to start-up businesses and those with tight cash flow and limited collateral," added Gooch-Smith.
According to Tamarah Bacon, SEED's business development & assistance manager, loan funds are flexible and can be used for:
- working capital
- inventory
- furniture and fixtures
- machinery and equipment
The maximum term on the loans is six years and the current rate is six percent fixed with no pre-payment penalty.
"A micro loan can be a portion of the total financing needed by a small business," explained Bacon. "If a borrower needs to finance $150,000, and a bank is willing to lend $100,000, SEED can provide a $50,000 micro loan behind the bank, thus filling the gap and completing the financing package for the borrower," added Bacon.
In 2012, SEED financed the following Rhode Island businesses under the Micro Loan Program:
- Bluemoonstone Creations, Providence
- Castle Awards, East Providence
- Hair, Heart & Soul, Bristol
- JM Painting & Plastering, Cranston
- Marathon Industries, Warwick
- Stock Culinary Market, Providence
- WSI Internet Consulting & Education, Narragansett
- Zingg Music Lab, Barrington
SEED is also a Community Development Financial Institution (CDFI), under the U.S. Department of the Treasury, and can make loans to Rhode Island borrowers up to $200,000, for working capital and real estate projects. The term on the loans is up to ten years. If necessary, longer repayment periods are available. Interest rates range from five to six percent fixed.
Small business owners need to have at least a 600 credit score. SEED focuses on the past two years to see how debt has been handled, and also reviews the small business owner's household income to see if there is repayment ability.
"SEED can be flexible with repayment terms and collateral, and is willing to take a second or third lien position on the small business owner's home," stated Bacon.
The application process for loans up to $200,000 includes completing SEED's application form, and providing federal income tax returns for three years for the small business and the owners. The list of other documentation required can be found in the application form which is available on SEED's website.