1244 Checklist 504 Eligibility Checklist

OMB Control Number: 3245-0071

Expiration:

ELIGIBILITY INFORMATION REQUIRED FOR 504 SUBMISSION

NON PCLP

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 Any Item(s) That Are 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%, Project location is 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 “Yes,” attach a Certification of Franchise Documents in Exhibit 13.

If “No”, Franchise Agreement and Franchise Disclosure Statement must be submitted to SLPC with (or prior to) submission of the 504 application

III. Principals of the Applicant - Answer All Questions. If a question is answered "No," the loan is not eligible.

All principals of business are either U.S. citizens, or non-U.S. citizens whose 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 USCIS 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 Item(s) That Are Applicable.

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

• primarily engaged in the business of lending

• a passive business owned by developers or landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds and that is not an Eligible Passive Company discussed below

• bail bond company

• life insurance company

• located in a foreign country or owned by undocumented (illegal) aliens

• pyramid sale distribution plan

• any illegal activity

• principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting.

• consumer or marketing cooperative

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

• 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

• primarily engaged in political or lobbying activities

• a speculative business (such as oil wildcatting, mining and research & development)

___Applicant is a pawn shop. If item is 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 hotel, motel, recreational vehicle park, trailer park, campground, marina or similar type of business. If item is 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 item is 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 item is 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 item is 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 item is checked, fill in the blanks and answer the following

questions. If an individual question or both parts of a two part question is answered “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 loans proceeds to acquire or lease, and/or improve or renovate real or personal

property (including eligible refinancing) that it leases 100% to the 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 EPC and each 20% or more owner of OC will guarantee loan. YES___ NO___

• The debenture amount does not exceed $5.5 million and is to a small manufacturer or the

project meets the public policy goal of at least 10% reduction in Borrower’s energy

consumption or meets the public policy goal of generating renewable energy or renewable

• fuels. If “No” please answer the following: YES___NO___The aggregate amount of the SBA portions for this application and for all outstanding

loans to this applicant, the EPC, the OC and their affiliates do not exceed $5.0 million(or $5.5 million if the

504 loan is eligible under public policy goals or $5.5 million if the applicant is a Small

Manufacturer.).All outstanding loans include any prior SBA loan guarantees, committed or

outstanding, 7(a) or 504. (Note: If the applicant has a previous small manufacturer

or eligibility energy loan it does not reduce the $5,000,000 limit for regular 504 and

Public Policy Project loans.] 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, or assisted living facility. If item is checked, answer the following

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

Applicant is licensed as a nursing home or assisted living facility YES___ NO___

V. Project Financing and Costs - Answer All Questions. If an individual question or both parts of a two part

question is answered "No," the loan is not eligible.

Any costs attributable to the Project to be reimbursed to the Applicant are for land that was acquired with financing for

a term of 3 years or less and prior to applying to SBA for the 504 loan and used in the Project, or

for other eligible expenses that are directly attributable toward the Project. 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 less (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% 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 Borrower has been in operation for 2 years or less (or there is a change in 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 debenture amount does not exceed $5.5 million and is to a small manufacturer or the project meets the public

policy goal of at least 10% reduction in Borrower’s energy consumption or meets the public policy goal of

generating renewable energy or renewable fuels. If “No” please answer the following: 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 $5.0 million. All outstanding loans also

include any prior SBA loan guarantees, committed or outstanding, 7(a) or 504.) [Note: If the

applicant has a previous small manufacturer or eligibility energy loan it does not reduce the

$5,000,000 limit for regular 504 and Public Policy Project loans.] YES___NO___

VI. Project Economic Development Goals

Answer if debenture amount is $5,000,000 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 over $5,000,000 to $5,500,000:

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 it is an Energy Efficiency Project (achieves the public policy goal

of either 10% reduction in energy use or production of renewable energy). YES___NO___

If “No”, loan is not eligible.

VII. Use of Project Proceeds – Check Any Item(s) That Are 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 item is 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.

If item is checked, loan is not eligible.

___To fund purchase, renovation, or reconstruction of an existing building. If item is 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 item is 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 increase its occupancy 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 item is checked, answer the following

question. If "No," loan is not eligible.

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

(20 years if a 20 year 504 Loan is requested) YES___ NO___

___ 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 item is 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 item is 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 as part of an expansion 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. Either:

1. Substantially all (85% or more) of the proceeds of the existing debt was used to acquire

land, including a building situated thereon, to construct a building thereon or purchase

equipment and the remaining amount (15% or less) was incurred for the benefit of the

small business seeking the refinancing; or YES___ NO___

2. If the land, building or equipment was originally financed through a commercial loan

(hereafter the “original loan”) that was subsequently refinanced one or more times:

1. Substantially all (85% or more) of the proceeds of the original loan was used to

acquire land, including a building situated thereon, to construct a building thereon or

purchase equipment and the remaining amount (15% or less) was incurred for the

benefit of the small business seeking the refinancing; and YES___ NO___

2. The existing debt is the most recent refinancing of the original loan;

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___

___Loan proceeds will affect properties included or eligible to be included in the National Register of Historic Places.

VIII. 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.

A) All statements must be answered as “True” to be eligible.

• 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 officers or directors of community organizations such as certified development companies and microlenders or

members of their household have a direct or indirect financial or other interest in the Applicant unless the organization has beeninactive 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 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____

B) Check any item(s) that are applicable. If checked, SBA Standards of Conduct Committee approval will be required prior

to issuance of an SBA loan authorization.

_____ 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.

_____ 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.

_____ 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.

_____ 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 10.0% or more financial interest in the Applicant.

_____Employee of community organizations such as a certified development companies or microlenders (or a close relative

or household member of such an individual) has a financial interest in the Applicant.

(**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 or an agent involved in the loan process. An Associate of a small business is an officer, director, owner of more than 20 percent of the equity, or key employee.)

IX. Other - Check Any Item(s) That Are Applicable.

___Applicant or Affiliate(s) has/have existing SBA loan(s). If item is checked, answer the following question.

If "No," loan is not eligible.

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

___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. (If “Yes,” explain in Section X.) YES___ NO___

___Applicant business is principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious

beliefs whether in a religious or secular setting. (If “Yes,” explain in Section XI.) YES___ NO___

___ Applicant has products or services of a prurient sexual nature. If item is checked, answer the following questions.

If "No," loan is not eligible.

Applicant does not present live performances of a prurient sexual nature. YES___ NO___

Applicant does not derive more than 5% of its gross revenue directly or indirectly, through the sale of

products or services or the presentation of any depictions or displays of a prurient sexual nature. YES___ NO___

___Applicant conducts operations both in the United States and in a foreign country. If item is checked, answer the

following questions. If "No," loan is not eligible.

Applicant operates primarily in the United States. YES___ NO___

Applicant pays taxes to the United States OR applicant uses American products, materials, and labor. YES___ NO___

Loan proceeds will be used exclusively for the benefit of the domestic operation. YES___ NO___

Applicant does not conduct trade in any country with which the United States Government restricts trade

according to the Export-Import Bank’s current “Country Limitation Schedule” (CLS), which can be

found at http://www.exim.gov/tools/country_limits.html YES___ NO___

___Loan is collateralized by Indian lands held in trust. YES___ NO___

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 Signature

and Typed Name and Title _________________________________ Date ___________________________________

(

NOTE: According to the Paperwork Reduction Act, you are not required to respond to this collection of information unless it displays a currently valid OMB Control Number. The estimated burden for completing this form, including time for reviewing instructions, gathering data needed, and completing and reviewing the form is 30 minutes per response. Comments or questions on the burden estimates should be sent to U.S. Small Business Administration, Chief, AIB, 409 3rd St., SW, Washington DC 20416. PLEASE DO NOT SEND FORMS TO THIS ADDRESS.

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