Loan Programs
Since the development of a partnership between Mo-Kan and the U.S. Small Business Administration in 1982, Mo-Kan has provided commercial loans to area businesses in an effort to strengthen our communities through economic development. Loan programs offered by Mo-Kan are designed to be an affordable means in which businesses can access much-needed capital. Through many of the loan programs, Mo-Kan partners with a local lender and provides “gap financing” for owner-occupied businesses.
Many entrepreneurs that Mo-Kan is able to help are in search of ways to preserve their cash on hand for the use of working capital. Mo-Kan is able to fill the financing gap between what a local bank is able to provide and what the borrower has available for down payment. In many cases, the local lender provides 50% of the financing and Mo-Kan secures 30-40% of the project costs. All of Mo-Kan’s loan products offer a fixed interest rate for the life of the loan. Fixed rates provide entrepreneurs the assurance they need that their payments will not increase over time, which in turn helps them gauge future growth opportunities.
Mo-Kan’s primary objective for these loan programs is economic development through job creation. Local job creation directly increases net wealth in our communities. Along with the loan programs, Mo-Kan offers technical assistance to entrepreneurs needing aide in finalizing/analyzing their endeavors. Technical assistance is provided in many forms, ranging from financial analysis to something as simple as introducing the right contacts.
In addition to loan programs, Mo-Kan offers technical assistance to entrepreneurs requesting aid in analyzing their financial needs.
Benefits Include:
- Loan amounts ranging from $25,000 to $5.5 million
- Fixed Asset financing only: real estate, building purchase or construction and/or equipment, and refinancing.
- Below-market interest rates
- 10- or 20-year term available
- No balloon payments
- Fixed interest rate for the life of the loan
- Available in Missouri and Kansas
Build or buy the space and equipment you need to grow.
Building your business from the ground or just making something a little better? Small Business Administration 504 loans provide financing from $25,000 to $5.5 million to help you buy, build, or renovate commercial real estate or purchase machinery and capital equipment for your small business.
Eligible Uses
Qualified borrowers can use Small Business Administration 504 loans to finance:
- Buy, build or renovate commercial real estate
- Purchase machinery or equipment
- Debt refinance (for commercial estate & equipment)
- Include professional fees & interim financing costs
Requirements
You may qualify if you and your business meet the following criteria:
- The business is for-profit
- The business is located in the United States
- The business is valued at less than $15 million and the business has an after tax profit of less than $5 million a year over the average of two years.
- The business owner will occupy 51% or more of commercial real estate that is being renovated or purchased.
- The business owner will occupy 60% or more of commercial real estate that is being built.
- Individuals who own 20% or more of the company are willing to act as personal guarantors.
- The business owner can meet the down payment requirements outlined below.
Down payment requirements:
These commercial real estate and equipment loans are financed in part by a bank (up to 50% of the total loan), in part by Mo-Kan Development, Inc. (up to 40% of the total loan) and in part by you, the business owner (10%, 15% or 20% depending on the type of business).
- 10% for an existing business purchasing multi-use property
- 15% for start-up companies or special use property purchases.
- 20% for start-up companies in a special use property.
Rates
Interest Rates:
Interest rates for the Small Business Administration 504 loan program are set once-a-month with a bond sale. They are FIXED for the life of the loan and fully amortized.
Debt Refinance
Here’s what you need to know:
- Refinance commercial real estate loans that have been in place for a minimum of two (2) years (existing SBA notes for commercial real estate are not eligible).
- The borrower must be current on their loan payments for the last 12 months.
- 90% loan-to-value is allowed and SBA authorization expires after nine (9) months.
- Cash out can only be used for business operations incurred within 18 months and cannot be more than 20% of the total project with a loan-to-value of 85%. Renovations cannot be funded with the cash out, however repairs are eligible.
- Debt refinance with business expansion may be eligible if the expansion costs exceed reginance costs by 2:1.
The Process
- The borrower goes to a bank for a loan and the lender recognizes if SBA 504 is a good fit and calls us to determine if the project is eligible.
- Once the loan is approved by the bank they send it to us so we can begin the underwriting process.
- When the loan package is complete and approved by our Loan Review Committee, we submit it to SBA.
- SBA issues approval of the loan
- The lender funds their loan (50% of the project)
- SBA funds their loan (40% of the project) and the interest rate is set.
- Our servicing team assists the borrower for the life of the loan.
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Benefits Include:
The SBA 7(a) Guarantee Program stems private sector lending by providing lending institutions additional security for qualifying loans. Depending on the size of the loan, a 75 or 85 percent guarantee is provided to the lender through the 7(a) program. The loan is provided to the small business by a bank of choice. The bank chosen is responsible for setting the terms and rate.
However, SBA sets a ceiling on the rates and has a maximum term limit for each use of loan proceeds, which, in turn, is beneficial to the needs of the small business/entrepreneur. Mo-Kan participates in the 7(a) program by providing technical assistance to the business/entrepreneur and packaging of the guaranty application.
- Guarantee provided to the bank financing your loan need: provides additional security for your bank and your business
- No balloon payments
- Reasonable term and rate of interest
- Available in Missouri and Kansas
Set up shop and finance that long list of needs for your new or growing business.
Small Business Administration 7(a) loans provide financing from $25,000 to $5 million to meet your general business needs, and are offered by banks. Mo-Kan Development Inc. helps these banks navigate the loan process in order to provide small business owners with greater access to this program. If this sounds like the right loan for you, be sure to contact your business banker for additional information.
Eligible Uses
Qualified borrowers can use Small Business Administration 7(a) loans to:
- Finance startup expenses
- Finance working capital
- Purchase an existing business
- Buy, build or renovate commercial real estate
- Purchase machinery or equipment
- Business debt refinance
- Include professional fees
Requirements
Are you eligible to get a loan?
- The business is for-profit
- The business is located in the United States
- The business is valued at less than $15 million and the business has an after tax profit of less than $5 million a year over the average of two years.
- The business owner will occupy 51% or more of commercial real estate that is being renovated or purchased.
- The business owner will occupy 60% or more of commercial real estate that is being built.
- The business has demonstrated need for credit
Rates
Interest Rates:
Interest rates for 7(a) loans vary depending on the size of the loan, the term of the loan and whether or not the lender providing the loan chooses to use variable or fixed rate pricing. Interest Rates outlined below are the MAXIMUM rates a lender can charge, market rates may actually be lower than the maximum.
Maximum Fixed Rates
Loan Size Interest Rate
$250,001 or greater 9.75%
$50,001 – $250,000 10.75%
$25,001 – $50,000 11.75%
$25,000 or less 12.75%
* A base rate of 4.75% was used to calculate the fixed rates above
Maximum Variable Rates
Loan Size Less than 7 years 7 years or more
$50,001 or greater 5.50% 6.00%
$25,001 – $50,000 6.50% 7.00%
$25,000 or less 7.50% 8.00%
*The Wall Street Journal Prime base rate of 3.25% was used to calculate the variable rates above
The Process
- The Lender call Mo-Kan Development Inc. to check loan project eligibility and submits the loan package if eligible.
- Mo-Kan Development Inc. provides feedback to the lender on any additional information or documentation needed.
- Once the package is complete, Mo-Kan Development Inc. submits the package to SBA.
- SBA approves the loan
- Mo-Kan Development Inc. prepares closing for lender.
- The lender is now responsible to close and disburse the loan.
- Mo-Kan Development Inc. is available to answer any questions regarding loan modifications and liquidation.
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Since 1990, Mo-Kan has provided gap financing for small businesses through its locally operated and managed Revolving Loan Fund (RLF) program. The RLF was originally funded through the Economic Development Administration (EDA) and local funds. Since RLF’s inception, the program has been able to loan out over $3 million, six times the original investment. In addition to the monies loaned directly from RLF, the fund has leveraged over $14.5 million from private sector lenders and small business owners.
The Revolving Loan Funds include:
- Loan amounts ranging from $20,000 to $200,000
- Variety of loan uses: real estate, building purchase or construction, equipment, inventory, and working capital
- Below-market interest rates
- Terms up to 10 years
- No balloon payments
- Fixed interest rate for the life of the loan
- Available in Missouri and Kansas
Mo-Kan Regional Council was awarded a Rural Business Enterprise Grant (RBEG) from USDA in fiscal 2010 to create a microloan fund available to small businesses located in rural areas. The loan proceeds are available to small and emerging private business enterprises located within rural populations in the Missouri counties of Andrew, Buchanan, Clinton and DeKalb (populations of 50,000 or less).
Benefits include:
- Loan Amounts $2,500 – $30,000
- Loan uses equipment, inventory, working capital, refinance
- Loan Terms 1-5 years depending on use and cash flow needs of the business
- Below Market Rates, typically 4 to 6 percent
Business Loans in 2017
2017 lending efforts have resulted in six funded loans, worth more than $1.3 million. The total project costs exceed $3.4 million. The investment in these companies located in Buchanan, Clinton, Gentry and Leavenworth Counties also resulted in the creation of 22 new jobs and 18 retained jobs.