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Small-business Loan Limits UpAn overhaul of a key federal program signed into law last week means small businesses will be able to borrow more for new equipment and construction.
President George W. Bush last week reauthorized the U.S. Small Business Administration's 504 loan program for the next two years and increased the maximum size of loans. The loans are traditionally used for the purchase of equipment, construction, renovation, and acquisition of land projects.
"The higher loan limits will help us fund larger projects and help small businesses," said Chet Sadowski, senior vice president of the Empire State Certified Development Corp., a wholly owned subsidiary of the New York Business Development Corp., which covers the metro area. Aside from Empire State, the loans locally are made through the Long Island Development Corp. in Bethpage and the Bronx Overall Development Corp.
"This puts us into a whole other league," said Roslyn Goldmacher, president of the Long Island Development Corp.
The maximum size of regular loans will increase from $1 million to $1.5 million; from $1.3 million to $2 million for public policy loans including minority- and women-owned businesses; and from $1 million to $4 million for manufacturers, which are now in their own category.
Under the program, Certified Development Companies can lend up to 40 percent of the project cost at these new caps. Fifty percent would come from a bank or other lender and typically 10 percent is required by the applicant. The funds are generally offered under a long term, low fixed interest rate. Several small business owners were pleased to hear the news, noting that the increase in caps will help the New York area particularly because of higher land costs here. "Real estate prices are continually going up," said Penda Aiken, owner of Brooklyn-based Penda Aiken Inc., a staffing firm that used the loan program to purchase its current building. "At some point we could add to this facility. I think it certainly will help."
BY JAMIE HERZLICH
STAFF WRITER Business Day
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