Direct Lending and Loan Participation Programs
BCF Direct Lending Program
The BCF may provide debt financing directly to NMSDC certified MBEs through its Direct Lending Program. The funds may be used for a variety of purposes and can be in the form of either a term loan or line of credit. The current maximum loan is $500,000 and the minimum is $75,000. The BCF will consider higher loan amounts (currently up to $1.125 million) on a case by case basis. The loan term may not exceed 7 years.
The BCF will consider many items when evaluating a loan application including: borrowers future business prospects, repayment ability/capacity, financial condition, earnings history, earnings forecast, management experience, credit history and available collateral. There is a non-refundable $350 application fee required with the Direct Lending Program.
BCF Loan Participation Program (LPP)
Through the LLP, the BCF participates in a loan program to an eligible minority business enterprise that is underwritten, extended, and serviced by participating bank or lending organizations. The BCF’s participation may provide needed credit enhancement for the lender. The following types of loans and credit facilities are accessible through the LPP:
Lines of Credit
Intermediate Term Loans
Working Capital Loans
All LPP loans are made by BCF and participating lenders. The lender’s risk is reduced as a result of the BCF participating in a major portion of the loan. As a result of the BCF’s credit enhancement, lenders are able to provide financing that may otherwise be denied based on the lender’s normal underwriting standards.
The BCF loan program is limited to NMSDC certified minority business enterprises that have supplier/vendor relationships with national or regional corporate members of the NMSDC.
The BCF LPP:
How It Works
Credit decisions and loans in the LPP are made by participating lenders contingent upon the BCF’s loan participation and final loan approval. If approved, the BCF purchases a participation in the loan up to 75% of the loan amount subject to maximum levels of retained risk on the part of the BCF.
The total amount of the LPP loan facility is determined by the participating lender; however the BCF’s maximum exposure may not exceed $1,125,000 in a participation loan. The participating lender must retain a minimum of 25% of the amount of the loan facility.
Loan Terms and Conditions
The length of time for repayment depends on the type of loan, use of proceeds, and the ability of the business to repay; however the term of any given loan may not exceed seven(7) years. Maximum interest rates may not exceed 3% over prime. In each case, the participating lender must retain a minimum of 25% of the amount of the loan facility.
Generally, the borrower must pledge sufficient assets, to the extent they are reasonably available, to secure the loan. Personal guaranties are required from all principal owners of the business. Liens on personal assets of the principals also may be required.
The lender monitors and administers the loan subject to BCF Operating Guidelines and Procedures.
BCF Certified Lenders
Any Federal or state chartered bank, Savings and Loan Association, credit union or insurance company subject to government examination and regulation, and in good standing is eligible to be a BCF Certified Lender. Other lenders with commercial loan experience and sound financial strength may also be approved.
At a minimum, the borrower needs to provide the lender with the following information when requesting a loan:
- Purpose of the loan and the source(s) of repayment
- History of the business
- Financial statements for the most recent three years (existing business)
- Schedule of term debts
- Aging of accounts receivables and payables (existing business)
- Projection of income, expenses and cash flow together with assumptions used
- Signed personal and corporate income tax returns for the most recent three years.
How to Get Started
A prospective borrower should discuss BCF financing with his/her bank or lender. If the borrower’s bank is not familiar with the BCF, they can contact the BCF to obtain information on the BCF Loan Program. The BCF can help prospective borrowers find a bank or lender.
Click the button below to download the BCF Financing Application
Click the button below to download the BCF Personal Financial Statement Form