Economic Development Lending

Community and Economic Development

Economic Development loans are flexible financing tools that are issued by local governments and are designated for activities to promote economic and neighborhood development for specific jurisdictions. This type of loan supports activities that revitalize neighborhoods, stimulate job creation, and increase tax revenue for the City. These funds are often used to supplement senior loans from other public and private lending institutions. Economic Development Loans can also be used to leverage Federal and State investment within local communities.

Often, these types of financing packages are used to incentivize private investment to improve the appearance of commercial and industrial areas. In many instances, these loans are tied to job creation goals which help satisfy the over-arching goals for economic development within the community. Reinvestment leads to the improvement in the development of talent, skills, and living conditions for the inhabitants, business owners, and the customer base within the surrounding community.

7A Loans

SBA 7(a) loans, have a maximum loan amount of $5 million, and repayment terms of up to 25 years. Loans guaranteed by the SBA are assessed a guarantee fee. This fee is based on the loan’s maturity and the dollar amount guaranteed, not the total loan amount. The lender initially pays the guaranty fee and they have the option to pass that expense on to the borrower at closing. The funds to reimburse the lender can be included in the overall loan proceeds.

On loans under $150,000 made after October 1, 2013, the fees will be set at zero percent. On any loan greater than $150,000 with a maturity of one year or shorter, the fee is 0.25 percent of the guaranteed portion of the loan. On loans with maturities of more than one year, the normal fee is 3 percent of the SBA-guaranteed portion on loans of $150,000 to $700,000, and 3.5 percent on loans of more than $700,000. There is also an additional fee of 0.25 percent on any guaranteed portion of more than $1 million.

504 Loans

The US Small Business Administration 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates.

As part of its mission to promote the development of businesses, the SBA offers a number of different loan programs tailored to specific capital needs of growing businesses. The 504 program works by distributing the loan among three parties. The business owner puts a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a so-called Certified Development Company (CDC) puts up the remaining 40%. Certified Development Companies are established under the 504 code as non-profit corporations set up to support economic growth in their local areas. The National Association of Development Companies provides a search tool to find SBA 504 Lenders in your state.

The maximum amount of the loan is $5 million ($5 million for meeting SBA-defined policy goals and $5.5 million for manufacturers and some energy-related policy goals), and if the borrower defaults, the private sector lender is paid off first, reducing the risk to the lender and encouraging loans.

Below are links to some local resource organizations that provide economic development funding:

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Baltimore Community Lending

Baltimore Community Lending makes loans to small real estate developers, startups, and small business owners who have no relationship with or are unable to get a loan from a bank.

Specializes in: Economic Development Lending

Melissa Badeker

Phone: (410) 319-0732
Website

875 hollins st.
Ste. 301
Baltimore, MD 21201

Innovation Works

The mission of Innovation Works (IW) is to reduce Baltimore’s neighborhood and racial wealth divide by teaching and accompanying members of disinvested communities to build and own successful social enterprises that create sustainable neighborhood economies and result in better family living, more resilient communities, and a safer, more vibrant city.

Specializes in: Economic Development Lending

Jay Nwachu

Phone:
Website

1400 Greenmount Avenue
Baltimore, MD 21202

Latino Economic Development Center

LEDC is a nonprofit organization that equips entrepreneurs and small business owners with capital and technical assistance / LEDC es una organización sin ánimo de lucro que apoya emprendedores y empresarios con asistencia técnica y microcrédito.

Specializes in: Economic Development Lending

Molly Terry

Phone:
Website

10 East North Avenue
Baltimore, MD 21201

Lendistry

Lendistry is a responsible minority-led lender that uses a fully-online application to help Maryland small business owners access loans, including SBA 7(a), in amounts ranging from $25,000 - $5 million.

Specializes in: Economic Development Lending

Clarence Campbell

Phone: (888) 594-7270
Website

2002 Clipper Park Road
Suite 105
Baltimore, MD 21211

Maryland Capital Enterprises, Inc.

Maryland Capital Enterprises Inc. provides small business loans, business counseling & education, and helps to develop business plans to assist entrepreneurs who start, expand, or purchase businesses.

Specializes in: Economic Development Lending

Nick Rudolph

Phone: (410) 546-1900
Website

333 North Charles Street
Baltimore, MD 21201

Maryland Department of Commerce

The Maryland Department of Commerce stimulates private investment, creates jobs, attracts new businesses, encourages expansion and retains existing companies. It also provides financial assistance to Maryland companies.

Specializes in: Economic Development Lending

Stacey Harvey Reid

Phone: (410) 767-6287
Website

401 East Pratt Street
Baltimore, MD 21202

Meridian Management Group

The Maryland Small Business Development Financing Authority (MSBDFA) was created by the Maryland General Assembly in 1978 to assist in the development of socially or economically disadvantaged entrepreneurs in the creation of Maryland businesses.

Specializes in: Economic Development Lending

Randy Croxton

Phone: (410) 333-2548
Website

823 E. Baltimore Street
Baltimore, MD 21202

Enterprise Development Group

Micro Lender that supports and works hand in hand with small business owners in order that they may succeed and prosper. Business loans from $500 to $50,000 and credit builder loans of $500. Counseling for Start-ups and those in need of credit repair.

Fikru Abebe

Phone:
Website

3411 Bank Street
Baltimore, MD 21224

Still have questions?
Of course, if you have questions on financing options and would like to visit with someone, call us at 410-984-3337. We can answer your questions and connect you to the resources you need.