FAQ's About CEDF Lending
Does CEDF provide grants?
Currently CEDF is not participating in any programs awarding grants to small businesses. Check the internet to see what active opportunities might be available.
Does CEDF offer loans to buy investment properties?
Does CEDF offer loans for “fix and flip” residential properties?
CEDF only provides commercial mortgages on 51% owner-occupied buildings. That means your business must occupy the majority of the floor space in the building. Renting out the remainder is acceptable and may be considered in the underwriting of the loan. Community lenders don’t typically participate in lending for investment real estate, whether commercial or residential. This link has helpful information explaining this sector of real estate finance:
https://www.bankrate.com/investing/financing-investment-property/#other-options
Does CEDF lend money for a down payment to buy a building?
Is a down payment required to buy a building?
Lenders expect borrowers to have a meaningful economic stake in any commercial loan. We typically would expect you to make a 20% down payment and CEDF would take a collateral interest in the building. The specifics of the underwriting decision depends on the building’s condition, value, location and other factors. But as you can see, borrowing money from one lender as a down payment for a loan offered by another lender wouldn’t be possible because the borrower would have no equity in the deal.
Is a down payment required for a business loan?
While we don’t expect term loan borrowers to bring a cash down payment to a loan closing, CEDF does expect that you have an equivalent, significant economic interest in the business. You might think of this value (which might be in the form of cash, equipment, inventory, vehicles or other property) like a down payment. This, along with other collateral in some cases, demonstrates your commitment to seeing that the loan is repaid as agreed. Community lenders are not usually willing to carry 100% of the risk in any venture.
Does CEDF have a minimum credit score?
Although it is common for commercial banks and credit unions to state a minimum credit score for a business loan, CEDF does not. This doesn’t imply that a credit score is of no importance. We are very interested in understanding an applicant’s complete story. Sometimes there are reasons that explain why a credit score is low. The trajectory of improvement and the timelines involved are also important.
Does CEDF lend out of state?
CEDF currently only offers business financing in Connecticut.
What are CEDF’s loan eligibility requirements?
In general, we focus on the towns and cities designated by the State of Connecticut as needing the most economic development. You can see a list of those communities at this page.
In the remainder of the state, we lend to low and moderate income business owners who are at or below a household income ceiling.
Does CEDF require a personal guarantee on all loans?
Yes, we are obligated to take a personal guarantee under the rules of the U.S. Small Business Administration, or to meet our commitments to our other sources of loan capital.
How long does it take to process a loan and receive the loan proceeds?
Much depends on when all required documentation is submitted to our lending department. Often underwriting can’t begin or be completed until a complete loan application package is in hand. In general, small business loans are processed in a few weeks. However, loans involving commercial property or real estate pledged as collateral can take more time.
Do you provide assistance to help write a business plan?
It would be a conflict of interest to directly coach a loan prospect on the specific contents of their business plan since we have to pass judgment on its viability. We do, however, provide educational help through our free online courses; and to a limited degree, through our pre-loan counseling advisory services. Depending on your needs, we may also refer you to our partners in the small business support community, such as SCORE, SBDC and Women’s Business Centers. To learn more about CEDF’s courses, visit: https://WeTeachSuccess.org/cedf-courses/
Can I get a loan if I am past due on my taxes?
If you have a delinquency with a state or federal agency, we expect that you have a formal payment plan in place. If you do, then a loan is possible. Obviously, we need to be certain you can meet this payment obligation in addition to the business debt you are contemplating taking on.
Do you provide assistance filling out all the documents required in the loan application?
Yes we do, and it will be our pleasure to work with you. We are happy to assist you to understand the requirements of a complete loan application package. Please just ask for help.
Do you lend to nonprofits?
Yes, as a nonprofit lender, CEDF welcomes 501 (c) 3 nonprofit applicants that meet the qualifications necessary for consideration:
-- Headquartered in Connecticut,
-- A minimum of 3 years of operating history,
-- A minimum of $500,000 in annual revenues, and
-- Are able to provide annual audits and 990 tax returns.