SBA Form 2234 Part Eligibility Information Required for PCLP Submission

OMB Approval No.: 3245-0348
Expiration Date: 12/31/2009

ELIGIBILITY INFORMATION REQUIRED FOR PCLP SUBMISSION

I. General Information - Fill out all blanks and answer all questions. If a question is answered “No,” the loan is not eligible.

Applicant Name ______________________________________________________________________________________________

CDC Name __________________________________________________________________________________________________

Describe Type of Business ______________________________________________________________________________________

Describe Project ______________________________________________________________________________________________

Applicant is an operating business organized for profit, is located in United States, has demonstrated a need for the

desired credit, and the desired credit is not otherwise available on reasonable terms from non-Federal sources. YES___NO___

The Applicant will use the Project Property and the Project is located in the United States. YES___NO___

The products and/or services of the Applicant business are available to the general public. YES___NO___

II. Size – Check Item(s) if Applicable and Fill out A or B below.

COMPLETE FOR APPLICANT:

If using the 504 size standard:

1. Tangible net worth of Applicant (excluding its Affiliates) ___________________Average net income

after Federal income taxes (excluding any carry-over losses) for the Applicant (excluding its Affiliates) for

the preceding two completed fiscal years __________________________

If using the alternative 7(a) size standard:

2. Primary industry of Applicant ________________________________NAICS Code of Applicant ________

Average annual receipts of Applicant Business (excluding affiliates) over last 3 completed fiscal

years ____________ No. of employees of Applicant Business _________________ SBA size standard

for applicant ____________

___Applicant has possible affiliates. If item is checked, provide the following information in Section X of this form:

List possible affiliates, discuss possible bases of affiliation and determine if affiliation exists.

If affiliation exists, provide a schedule showing combined size calculation.

The combined size calculation of applicant and its affiliates meets the size standard for the applicant’s primary industry

or the size standard for the primary industry of the applicant and its affiliates, whichever is higher. YES___ NO___

If size standard is exceeded by no more than 25%, Applicant agrees to use the assistance within a labor surplus area. YES___ NO___

___Applicant business has a franchise/license/dealer/jobber or similar agreement. If checked, answer the following question:

The SBA Franchise Registry lists the franchise/license/dealer/jobber or similar agreements as an approved agreement. YES___NO___

If “No”, answer the following: You have made the determination that the applicant business has the right to profit and risk of loss commensurate with ownership and there are no excessive restraints on the sale of the franchise/license/dealer/jobber or similar interest. If “No”, loan is not eligible YES___NO___

III. Principals of the Applicant – Answer all Questions. If a question is answered “No,”

the loan is not eligible.

Lender has assessed the liquid assets of the immediate family (including spouse and dependent children) of each owner of 20% or more of the equity of the Applicant (and of the Operating Company, if the Applicant is an Eligible Passive Company) and determined that they do not exceed: 

         For a financing package of $250,000 or less, two times the total financing package or $100,000, whichever is greater;

         For a financing package between $250,001 and $500,000, one and one-half times the total financing package or $500,000,

whichever is greater;

         For a financing package of more than $500,000, one times the total financing package or $750,000, whichever is greater

YES___NO__

All principals of business are either U.S. citizens or non-U.S. citizens whose INS status has been verified by the lender.YES___NO__                                                                                                                                                             

 

CHOOSE ONE:

_____The business is at least 51 percent owned by individuals who are U.S. citizens and/or who have verified Legal Permanent Resident (LPR) status from INS and control the management and daily operations of the business.  

_____The business is at least 51 percent owned by aliens with a verified status other than LPR, the lender has determined that continual and consistent management of the business has been provided by a U.S. citizen or by a verified LPR for at least one year and will continue indefinitely AND U.S. collateral is pledged sufficient to pay the loan in full at any time.  (Businesses less than one year old do not meet these requirements.)

 

No Associate of the Applicant is incarcerated, on probation, on parole, or under indictment for a felony

or a crime of moral turpitude. YES____NO___

IV. Type of Business – Check Any Items That Are Applicable

___Applicant is or does one of the following (If checked, loan is not eligible):

• primarily engaged in the business of lending

• a passive business that holds real and/or personal property to receive rent or lease income and does not provide sufficient services to deem it active and is not an Eligible Passive Company discussed below

• bail bond company

• life insurance company

• pyramid sale distribution plan

• any illegal activity

• consumer or marketing cooperative

• earns 1/3 or more of its gross annual revenue from packaging SBA loans

• primarily engaged in political or lobbying activities

• a speculative business (such as oil wildcatting)

___Applicant is a pawn shop. If checked, answer the following question. If “No” loan is not eligible.

More than 50% of Applicant’s income for the previous year was from the sale of merchandise

rather than from interest on loans. YES___NO___

___Applicant is a mortgage service company. If checked, answer the following question. If “No”, loan is not eligible

Any mortgage loans funded are sold within 14 days of loan closing. YES___NO___

___Applicant is a business that receives rental income (such as mini-warehouse or office suite). If checked, answer the following question. If “No”, loan is not eligible.

Applicant has provided adequate documentation that at least 50 percent of revenue is from services provided (not rental

income) or if a new business, projections demonstrate that at least 50 percent of Applicant’s revenue will be from services

provided YES___NO____

___Applicant is a motel, trailer park, campground or similar type of business. If checked, answer

the following question. If “No” loan is not eligible.

Applicant derives 50% or more of its gross annual income from transients who stay for periods of

time not exceeding 30 days. YES___NO___

___Any of gross annual revenue of Applicant business is derived from gambling. If checked, answer the

following question. If “No” loan is not eligible.

The revenue is from legal gambling activities and comprises 1/3 or less of gross annual revenue of

Applicant business and the business is not a racetrack, casino or otherwise have gambling as its

reason for being. YES___NO___

___Applicant is a private club or business. If checked, answer the following question. If “No” loan is not

eligible.

Business does not limit the number of memberships for reasons other than capacity. YES___NO___

___Applicant is a government-owned entity. If checked, answer the following question. If “No” loan

is not eligible.

Applicant is business owned or controlled by a Native American tribe, but is a separate legal

entity from the tribe. YES___NO___

___Applicant is an Eligible Passive Company (EPC). If checked, fill in the blanks and answer the

following questions. If “No” loan is not eligible. Attach additional sheet with Names and Legal Forms

if more than one OC. References below to OC mean each OC.

Name of Operating Company (OC)_____________________________________________________________________________

Legal Form of Entity of OC___________________________________________________________________________________

• The EPC will use the loan proceeds to acquire or lease, and /or improve or renovate real or personal

property (including eligible refinancing) that it leases 100% to one or more OCs. YES___NO___

• The OC is an eligible small business and the proposed use of proceeds would be an eligible use if

the OC were obtaining the financing directly. YES___NO___

• The EPC (with the exception of a trust) and the OC each are small under SBA’s size standards. YES___NO___

• The EPC is eligible as to type of business, other than being passive. YES___NO___

• The lease between the Eligible Passive Company and the Operating Company will be in writing,

will have a remaining term at least equal to the term of the loan (including options to renew exercisable

solely by the Operating Company), will be subordinated to SBA’s lien on the property and the rents

will be assigned as collateral for the loan. YES___NO___

• The OC will be a guarantor or co-borrower. If part of the assets are to be owned by the OC,

it will be a co-borrower. YES___NO___

• Each 20% or more owner of the EPC and each 20% or more owner of the OC will guarantee

the loan. YES___NO___

• The aggregate amount of the SBA portions for this application and for all outstanding loans to

the EPC, the OC, and their affiliates does not exceed $1.5 million (or $2 million if the PCLP loan

is eligible under public policy goals or $4 million if the applicant is a Small Manufacturer.) YES___NO___

• Neither the EPC nor the OC is a trust or SBA requirements regarding trusts are met. YES___NO___

___Applicant is a convalescent or nursing home. If item is checked, answer the following question. If “No”, loan is not eligible.

Applicant provides services beyond room and board YES___NO___

V. Project Financing and Costs – Fill in All Blanks and Answer All Questions. If a question is

answered “No,” the loan is not eligible.

Debenture Amount $________________________ Administrative Costs: SBA guarantee fee$_____________________

Interim Loan Amount $________________________ Funding Fee$______________CDC processing fee$_____________

Term of 504 Loan and Debenture ________________years Borrower’s Out-of-pocket Closing Costs $_____________________

CDC Closing Fee$___________ Underwriters fee$______________

PERMANENT FINANCING PROJECT COSTS

Third Party Loans $_____________ _________% RE Purchase____ or Lease____ $______________________

Net Debenture $_____________ _________% RE Construction ___or Impr.___ $______________________

Borrower Contribution $_____________ _________% Debt to be Refinanced $______________________

Professional Fees $______________________

Capital or Long-Term Equipment $______________________

Interim Interest and Fees $______________________

TOTAL $_____________ __________%= TOTAL $______________________

Third Party Loan for Debt Consolidation, if any $________=Debt Consolidation, if any $______________________

Any costs attributable to the Project to be reimbursed to the Applicant are for land acquired prior to applying

to SBA for the 504 loan and used in the Project or for other eligible expenses toward the Project within nine

months prior to receipt by SBA of this application. YES___NO___

The Interim Loan does not cover the Borrower’s contribution. The source of interim financing is not from any

SBA program, directly or indirectly; the terms and conditions of the financing are acceptable; the source is not the

Applicant or an Associate of the Applicant; and the source has the experience and qualifications to monitor

properly all Project construction and progress payments. YES___NO___

The Borrower Contribution is cash or property that is part of the Project Property and is not derived from an SBA

business loan program. If the contribution is borrowed, the interest rate is reasonable and any lien on the Project

assets is subordinate to the liens securing the 504 loan, and the loan will not be repaid at a faster rate than the

504 loan. YES___NO___

If the Borrower has been in operation for 2 years (or there is a change in ownership of the applicant business)

• There is an additional Borrower Contribution of at least 5 % (above the minimum 10 %)

• The Debenture will finance no more than 35% of the Project and

• At least 50% of the Project financing will be from state or local government, banks or other financial institutions,

foundations or other not-for-profit institutions, or seller (provided seller subordinates its interest to the debenture)YES___NO___

If the Project involves a limited or single-purpose building or structure

• There is an additional Borrower Contribution of at least 5 % (above the minimum 10 %)

• The Debenture will finance no more than 35 0% of the Project

• At least 50% of the Project financing will be from state or local government or other financial institutions, foundations or other not for-profit institution, or seller (provided seller subordinate its interest to the debenture) YES___NO__

If the Borrower has been in operation for 2 years or less (or there is a change of ownership of the applicant business) and the Project involves a limited or single-purpose building or structure,

• The Borrower Contribution is at least 20%

• The Debenture will finance no more than 30% of the Project and

• At least 50% of the Project financing will be from state or local government, banks or other financial institutions,

foundations or other not-for-profit institutions, or seller (provided seller subordinates its interest to the debenture) YES___NO__

The Third Party Loan is at least as much as the 504 Loan (net proceeds). The Third Party Loan(s) has a term of at least 7 years for a 10 year debenture and at least 10 years for a 20 year debenture. The interest rate is reasonable. Any financing provided by the seller of Project Property is subordinate to the 504 loan and may not be prepaid without SBA consent. YES___NO___

No more than 50% of eligible Project costs are from Federal sources. YES___NO___

Any debt consolidation included in the Third Party Loan will not improve the lien position of the Lender

on the pre-existing debt, unless the debt is a previous Third Party Loan. YES___NO___

The aggregate amount of the SBA portions for this application and for all outstanding loans to this Applicant

And its affiliates does not exceed $1.5 million, or $2 million if the PCLP loan is eligible under the following

public policy goal or $4 million if the applicant is a Small Manufacturer or an Energy Efficiency Project. YES___NO___

VI. Project Economic Development Goals – Answer Question.

Answer if debenture amount is $1,500,000 or less:

This Project creates or retains one Job Opportunity for every $65,000 ($100,000 for a small Manufacturer) guaranteed by SBA. 

YES___NO___

If "No," answer the following question:                                                                                                                                        

The CDC's overall portfolio of 504 loans, including this loan but exclusive of 504 loans to Small Manufacturers meets or exceeds the CDC's required Job Opportunity Average AND the Project achieves the following community development or public policy goal: __________________________________

(A Goal must be cited for any 504 Loan where the above jobs test is not met).                                                    YES___NO___

If “No”, loan is not eligible.

Answer if debenture amount is $1,501,000 to $2,000,000 ($4,000,000 for an Energy EfficiencyProject):

This Project is for a small manufacturer and it creates or retains one Job Opportunity for every $100,000 guaranteed by SBA and the Project achieves the following community development or public policy goal: ___________________  YES___ NO___

If "No," answer the following question:                                                                                                                                              

The project creates or retains one Job Opportunity for every $65,000 guaranteed by SBA or the CDC's overall portfolio of 504 loans, including this loan but exclusive of 504 loans to Small Manufacturers meets or exceeds the CDC's required Job Opportunity Average AND the Project achieves the following public policy goal: ______________________                                                 YES___NO___

If “No”, loan is not eligible.

Answer only if a debenture amount is over $2,000,000 to a Small Manufacture:

This Project creates or retains one Job Opportunity for every $100,000 guaranteed by SBA and the Project achieves the following community development or public policy goal:_________________                          YES___ NO___

If “No”, loan is not eligible

VII. Use of Project Proceeds – Check if Applicable

___ To relocate any operations of a small business which will cause a net reduction of one-third or more in the

workforce of the relocating small business or a substantial increase in unemployment in any area of the

country. If checked, answer the following questions. If “No” loan is not eligible.

The relocation is for key economic reasons and crucial to the continued existence, economic wellbeing,

and/or competitiveness of the applicant; and the economic development benefits to the applicant and

the receiving community outweigh the negative impact on the community from which the applicant

is moving. YES___NO___

___To provide or refinance funds used for payments, distributions, or loans to Associates of the Applicant,

except payment of ordinary compensation for services rendered. If checked, loan is not eligible.

___To fund purchase, renovation, or reconstruction of an existing building. If checked, answer the following

questions. If “No” loan is not eligible.

• Applicant (or Operating Companies) will occupy at least 51% of the rentable property. YES___NO___

• Loan proceeds will not be used to remodel or convert space not occupied by the Applicant

or OC. YES___NO___

• Third Party Loan proceeds used to renovate the rental space are not counted towards the 504

first mortgage requirements or the Borrower’s Contribution. YES___NO___

___To finance construction of a new building. If checked, answer the following questions. If “No” loan is not eligible.

• If building will contain rental space, Applicant (or Operating Companies) will occupy 60% of rentable

space immediately, will lease no more than 20% of rentable space long term, will occupy more than 60%

of rentable space within 3 years and plans to occupy at least 80% of rentable space within 10 years. YES___NO___

• Community improvements do not exceed 5 percent of construction proceeds. YES___NO___

___ To purchase, transport, dismantle or install machinery and equipment. If checked, answer the following

question. If “No” loan is not eligible.

• The machinery and equipment has a useful life of at least 10 years. YES___NO___

(20 years if a 20-year 504 loan is requested)

___To purchase short-term equipment, furniture and/or fixtures. If item is checked, answer the following question.

If “No,” loan is not eligible.

The dollar amount compared to the total project cost is minimal and will not affect the maturity based upon

a weighted average useful life and the items are essential to and a minor portion of the Project. YES___NO___

___To fund leasehold improvements. If checked, answer the following question. If “No” loan is not eligible.

Loan proceeds will be used to improve space occupied 100% by Applicant. YES___NO___

___ To acquire, construct or modify buildings and improvements, and/or to purchase and install machinery and

equipment located on land leased to the Applicant by the CDC or an unrelated lessor. If checked,

answer the following questions. If “No” loan is not eligible.

• The remaining term of the lease, including options to renew, exercisable solely by the lessee, will

equal or exceed the term of the Debenture, or, in the case of machinery or equipment, equals or

exceeds the useful life of the property or the term of the Debenture, whichever is less. YES___NO___

• The Applicant will assign its interest in the lease to the CDC with right of reassignment to SBA. YES___NO___

• If CDC is leasing property to the Applicant, the rent paid during the Debenture term will pay principal

and interest on all debt incurred by the CDC to finance the Project, and all related expenses. YES___NO___

___ Debt refinance is included in Project costs: If checked, answer the following questions. If “No” loan is not eligible.

1. Total debt refinanced is no more than 50% of new expansion costs YES___ NO___

2. The proceeds of the indebtedness were used to acquire land, including a building situated thereon, to construct a building thereon, or to purchase equipment YES___ NO___

3. The existing indebtedness is collateralized by fixed assets YES___ NO___

4. The existing indebtedness was incurred for the benefit of the small business concern; YES___ NO___

5. Project proceeds will be used only for refinancing existing indebtedness or costs relating to the

project financed YES___ NO___

6. The financing will provide a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are accounted for; YES___ NO___

7. The borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing; YES___ NO___

8. The financing under section 504 will provide better terms or rate of interest than the existing indebtedness at the time of refinancing YES___ NO___

9. No debt refinanced is due to an Associate of applicant, YES___ NO___

10. No debt refinanced is due to a Small Business Investment Company YES___ NO___

11. No creditor whose debt is refinanced is in a position to sustain a loss causing a shift of any part of a potential loss to SBA. YES___ NO___

VIII. PCLP Requirements – Check if Applicable

___Loan is for the following special purpose OR Applicant is or does one of the following (Loan is not eligible for PCLP):

• Disabled Assistance Loan Program (DAL)

• Energy Conservation

• Qualified Employee Trusts (ESOP)

• Pollution Control Program

• Does business in a foreign country

• Is engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a

religious or secular setting

• Derives directly or indirectly more than 5% of its gross revenue through the sale of products or

services, or the presentation of any depiction or displays, of a prurient sexual nature or that presents any live performances of a prurient nature

___Applicant or Affiliate(s) has/have existing SBA loans(s). If checked, answer the following question. If “No” loan is not eligible.

The existing SBA loan(s) is/are current. YES___NO___

___Question 7 on any required SBA Form 912, Statement of Personal History, for this application is

answered “Yes” (Loan is not eligible for PCLP.)

___Question 8 or 9 of any required SBA Form 912, Statement of Personal History, for this application is answered “Yes”. If checked,

answer the following:

The application meets one of the following criteria below (which is checked) YES___NO___

(If “No”, loan is not eligible)

____Lender has received written clearance of the character issue(s) from the Sacramento Loan Processing Center (SLPC).

____The charge resulting in a “yes” answer was a single misdemeanor that was subsequently dropped without prosecution and

CDC has documentation from the appropriate court or prosecutor’s office showing that the charge was dropped.

___CDC has previously submitted this application to SBA under any other program, including ALP or regular 504.

(Loan is not eligible for PCLP.)

___Loan will have primary collateral that will not meet SBA’s environmental requirements or that will require

use of a non-standard indemnification agreement. (Loan is not eligible for PCLP.)

___Business or any of its principals has been involved in a federal loan or federally assisted financing that defaulted

and caused a loss to the Federal government or any of its Departments or agencies. (Loan is not eligible for PCLP.)

___Some or all of refinancing included in Project is used to refinance same institution debt which is due to the PCLP CDC or the

Third Party Lender financing the new project or of affiliates of either. (Loan is not eligible for PCLP.)

___Not all collateral securing any debt refinanced as part of the Project is to secure the 504 Project Loans (Loan is not eligible for

PCLP.)

___Application is being submitted under the Recovery Act.

If checked, answer the following questions. If “No” loan is not eligible to be submitted under the Recovery Act.

● Loan proceeds will not be used for a casino, or other gambling establishment, golf course, aquarium, zoo or

swimming pool. YES___NO___

IX. Conflict of Interest

SBA may not provide financial assistance to an applicant where there is any appearance of a conflict of interest on the part of SBA or the CDC. All statements must be answered as “true” to be eligible.

• No SBA employee, the employee’s close relative or a member of the employee’s household is an employee, officer, director, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• No former SBA employee separated from SBA for less than one year is an employee, officer, director, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• No individual currently involved in a Small Business Development Center program, the individual’s close relative or a member of the individual’s household is an employee, officer, director, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• No member of Congress or an appointed official or employee of the legislative or judicial branch (or a close relative or household member of such an individual) is a sole proprietor, general partner, officer, director, employee, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• If an Associate** of the small business or member of any Associate’s household is a GS-13 or higher government employee or a Major or Lieutenant Commander or higher in the military, the small business applicant has submitted to the CDC a statement of no objection by the pertinent government department or military service. True____

• No member or employee of a Small Business Advisory Council or a SCORE volunteer (or a close relative or household member of such an individual) is a sole proprietor, general partner, officer, director, employee, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• No employee of a community organization such as a certified development company or microlender (or a close relative or household member of such an individual) is a sole proprietor, general partner, officer, director, employee, attorney, agent, creditor or debtor, or has a financial interest in the Applicant. True____

• No community organization or its officers or its directors have a significant financial interest in the Applicant unless the organization has been inactive in packaging SBA loans for at least two years prior to the application date. True____

• No CDC or Associate** of CDC has a real or apparent conflict of interest with Applicant, any of Applicant’s Associates, or any of the close relatives of Applicant’s Associates. True____

• No CDC or Associate or close relative of an associate of the CDC has a significant direct or indirect financial or other interest in the applicant, or has had such an interest within 6 months prior to the date of the application. True____

• No Associate of a CDC is incarcerated, on parole, or on probation or is a convicted felon or has an adverse final civil judgment (in a case involving fraud, breach of trust, or other conduct) that would cause the public to question the CDC’s business integrity. True____

• No CDC or any Associate of CDC has accepted funding from a source that restricts, prioritizes, or conditions the types of small businesses that CDC may assist under an SBA program or that imposes any conditions or requirements upon recipients of SBA assistance inconsistent with SBA’s loan programs or regulations. True____

• None of the Loan proceeds will directly or indirectly finance purchase of real estate, personal property or services from CDC or an Associate of CDC. True____

• Neither the Applicant, an Associate of Applicant, close relative nor household member of an Associate of Applicant is required to invest in CDC. True____

• None of the proceeds of the loan will be used to acquire space in project for which CDC has issued a real estate forward commitment. True____

(**Associate of a CDC is an officer, director, key employee, or holder of 20 percent or more of the value of the CDC’s stock or debt instruments. An Associate of a small business is an officer, director, owner of more than 20 percent of the equity, or key employee.)

X. COMMENTS REGARDING ANY OF ABOVE ANSWERS THAT REQUIRE EXPLANATION OR REGARDING ANY OTHER RELEVANT ELIGIBILITY ISSUES. ATTACH ADDITIONAL PAGE(S) IF NECESSARY.

CDC hereby certifies that the above information is true and correct, to the best of its knowledge, and that it has exercised due diligence to obtain the true and correct information. CDC is aware and acknowledges that SBA review of this form is a quick look at eligibility intended to provide limited protection to SBA and the CDC from making an ineligible loan, and that if an SBA loan number is assigned and SBA later learns that the loan is not eligible, SBA may pursue any available remedy against the CDC including a suit to recover the amount of any money wrongfully paid by SBA and administrative actions under 13 C.F.R. Part 120, Subpart I.

CDC Signature

Typed Name and Title_____________________________________________________________Date_____________________

Rev. 03/27/09

The PCLP CDC completes this form as part of the application package for Section 504 Loan and sends to: Sacramento Loan Processing Center, Small Business Administration, 6501 Sylvan Road, Suite 111, Citrus Heights, CA. 95610-5017 (Or fax to 916 735 0640).

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SBA Form 2234 (Part C) (09-09) Previous Editions Obsolete