The application process for financing through MSBDFA or MCBIF follows a similar structure from start to finish, with only slight variations based on the specific fund. While the standard steps are outlined below, processing times may vary depending on the completeness of your application and other factors. Check out the detailed application process for each funding option to get started.
Fund Use
Provide senior loans, subordinated loans, loans with equity features, acquisition of equipment, owner-occupied real estate, business acquisitions, leasehold improvements, professional/technical assistance, and refinancing of existing debt.
Loan Products
Term loans, lines of credit, demand loans, and letters of credit.
Investment Products
Convertible Subordinated Note, Preferred Stock, Common Stock, Warrants, and other equity vehicles. Surety Bonding Products Bid, payment and performance bonds.
Range of Funding
Minimum of $50,000 up to a maximum of $1,000,000.
Term of Debt
One to ten years with the ability to amortize the debt over a longer period of time. Lines of credit, short term loans and letters of credit may be issued for less than one year.
Interest Rate on Debt
Rates for term loans will generally range between 4% and 8%.
Rates for lines of credit will generally be between 4% and 7%.
Interest Rate on Professional /Technical Assistance Loans
Will generally range between 2% and 4%.
Collateral
Full, limited, and no collateral value coverage will be considered.
Personal Guarantees of Debt
Will be required.
Years in Business
Generally, businesses that have been operating for at least two years. Start-ups will be considered if principals have significant industry experience.
Business and Personal Credit Scores
Will consider businesses and individuals that have less than fair credit scores, taking in consideration special circumstances.
Application Fee, Commitment Fee & Closing Costs
Non-Refundable Application Fee: $250
Non-Refundable Commitment Fee: When financing is approved, a Commitment Fee ranging from $500 to $3,500 will be required at acceptance of the Commitment Letter.
Closing Costs: The closing costs will primarily consist of document preparation, MCBIF’s legal counsel, credit reports, lien reports, judgement reports, lien filing fees, and other incidental costs.
If the financing does not close, these costs remain as the applicant’s responsibility.
The business must be located in the State of Maryland to qualify. 50%of the investment funds must go to businesses located in designated Target Areas surrounding the various casinos. The other 50% of the investment funds can go to businesses located anywhere in Maryland.
Small business is defined by SBA size standards SBA.gov. You will need your business NAICS Code to determine if your business qualifies as a small business.
The interest rate will be based on the perceived risks of the transaction. The greater the risk of the loan; the higher the interest rate.
MCBIF requires an application fee of $250. If approved, a Commitment Fee ranging from a minimum of $500 to 1% of the approved loan amount with a maximum fee of $3,500. All closing costs including the fees for loan document preparation by MCBIF’s legal counsel will be the responsibility of the borrower.
After receipt of a complete application package and all supplemental clarifications, loans of $350,000 or less will receive a decision within 15 business days and if approved closings will typically range between 20 to 45 days from receipt of the signed commitment letter and commitment fee. If the loan is in excess of $350,000, it will receive a decision within 25 days and if approved closings will typically range between 20 to 45 days from receipt of the signed commitment letter and commitment fee.
If you are turned down by banks or other lending institutions you may still qualify for a loan from MCBIF.
The lack of collateral will not disqualify you from applying for a MCBIF loan, but it will be a key factor in determining approval, loan amount, interest rate and maturity.
A business plan is required for all MCBIF applicants.
A business plan generally should contain a detailed description of the product and/or service being provided, an industry outlook, a marketing plan, a description of the management team, personnel needs, and financial projections with assumptions.
Life insurance will be required on the key principals (if insurable) and in rare cases key employees for loans in excess of $100,000.
There is not a minimum requirement but generally an equity investment of 10% or greater of the total start-up cost is expected in a new business.
There is not a minimum requirement but generally, a down payment of 10% or greater is expected for an asset purchase.
Fund Use
Provide working capital, acquisition of equipment, supplies, business-occupied real estate (if business occupies at least 51% of useable square footage), business acquisitions, leasehold improvements, professional/technical assistance, refinancing of existing debt (under qualifying circumstances).
Loan Products
Term loans, open and revolving lines of credit, demand loans, letters of credit and guarantees to financial institutions.
Investment Products
Convertible Subordinated Note, Preferred Stock, Common Stock, Warrants, and other equity vehicles. Surety Bonding Products Bid, payment and performance bonds.
Range of Funding
Loans: Minimum of $25,000 up to a maximum of $2,000,000.
Equity: Minimum of $25,000 up to a maximum of $1,000,000.
Professional/Technical Assistance: up to $25,000.
Surety Bonding: up to $2,500,000.
Loan Guarantees: up to 80% with a maximum exposure of $2,000,000.
Term of Debt
Up to 7 years (with amortizations of up to 20 years).
Interest Rate on Debt
Rates for term loans will be fixed and range between 5% and 8%*. Rates for lines of credit will be fixed and generally be between 4% and 8%*. Rates for professional/technical assistance loans will be 2%.
*Rates for eligible SSBCI funded loans can be as low as 2%.
Surety Bonding Fees
Premiums fees up to 2%-3%
Loan Guaranty Fees
Annual fees range from .5% to 1.5%
Collateral
Full, limited, and no collateral value coverage will be considered.
Personal Guarantees of Debt, Surety Bonding and Loan Guarantees
Will be required.
Years in Business
Generally, businesses that have been operating for at least two (2) years. Start-ups (0 to 2 years) will be considered if principals have significant industry experience or support.
Personal Credit Scores
For Loans/Surety Bonding: Minimum personal credit scores of 550 for at least 50% of the ownership of the business.
For Equity: Minimum personal credit scores of 600 for at least 51% of the ownership of the business.
Application Fee & Closing Costs
Non-Refundable Application Fee: $250 except for loan guarantees and surety bonding.
Closing Costs: When financing is approved, deposit of $500 will be required at acceptance. The Commitment Fee will be applied to the closing costs. The closing costs will consist of credit, lien, judgement reports, lien filing fees, and incidental costs.
Financing document preparation and MSBDFA’s legal counsel will be the responsibility of MSBDFA. If the financing does not close, these costs become the responsibility of the applicant.
The company’s principal place of business must be in the State of Maryland to qualify.
Small business is defined by SBA size standards SBA.gov. You will need your business NAICS Code to determine if your business qualifies as a small business.
Financings that qualify for SSBCI funding will receive more favorable rates than those financings that do not qualify. The interest rate will be based on the perceived risks of the transaction. The greater the risk of the loan; the higher the interest rate. Refer to Debt Interest Rates to see the range of the interest rates.
If you are applying for debt or equity, there is a $250 non-refundable application fee required at submission of the application (not applicable for loan guaranty or surety bond requests). You can make payments online in the Application Portal.
Your application will not be processed until the application fee is paid and confirmed by the Maryland Department of Commerce.
If your financing is approved, a Commitment Fee of $500 will be required at the time the Commitment Letter is accepted. The Commitment Fee is non-refundable but will be applied to the closing costs. The closing costs will consist of credit, lien, judgement reports, lien filing fees and other incidental costs. Loan document preparation and MSBDFA’s legal counsel fees will be the responsibility of MSBDFA. If the financing does not close, these costs will be the responsibility of the applicant.
Yes, MSBDFA will collaborate with you and its partnering banks to try to identify the private funding needed to qualify for SSBCI.
No, MSBDFA will collaborate with you and its partnering banks to try to identify the private funding needed to qualify for SSBCI funding. If matching private funding is not available, MSBDFA will still consider providing financing using non-SSBCI funding which does not require a match.
Your assigned Loan Officer will advise you when that determination is made.
The lack of collateral alone will not disqualify you from applying for a MSBDFA loan, but it will be a factor, among others, in determining the approval, loan amount, interest rate and maturity.
A business plan is required for all MSBDFA applicants.
A business plan should be concise. However, it should contain a detailed description of the product and/or service provided; discussion of key events in applicant’s history; trends in applicant’s industry and market; a marketing plan; a description of the management team’s experience and responsibilities; key risks to applicant’s business, including labor, legal, regulatory, and competition.
Life insurance may be required on principals (if insurable) and in some cases key employees (if insurable) for financings in excess of $100,000.
There is not a minimum requirement, but generally, an equity investment of 10% or greater of the total start up cost is expected in a new business from the owners.
There is not a minimum requirement but generally, a down payment of 10% or greater is expected for an asset purchase.
For SSBCI financing, the borrower must receive a loan of at least 150% greater than the loan principal being refinanced, and the annual percentage rate (APR) must decrease by 30%.
For traditional MSBDFA program funding, the borrower must show improved cash flow. MSBDFA funding cannot be used to refinance debt that is in default or at risk of a loss.
MSBDFA attempts to provide the funding and structure that it determines meets the needs of the business to be successful. There is not a “cookie cutter” period to reach that determination. There are many factors. Some of which include the response time of the applicant. Once all information has been received and it has been determined to present a request for approval, the approving body normally meets the 2nd and 4th Thursday of each month. If approved, closing of the loan is dependent on the applicant’s ability to provide the necessary closing documents in a timely manner. Generally, this can occur between 3 to 6 weeks following acceptance of the Commitment Letter.
Taber J. Small is a Vice President and Loan Officer for MMG Capital Group. Prior to joining MMG, Mr. Small was an experienced commercial lender with previous employment at Bank of America, Wells Fargo, PNC, JP Morgan Chase and recently WesBanco Bank as a Senior Vice President Commercial Banker in middle market banking. During his tenure as a banker, he received numerous star banker awards and received the Omega Commercial Lending Advanced Credit Training Certificate of Achievement. He is a graduate of the University of Connecticut with a B.A. in Economics.
Mr. Taber is also very involved in the community and serves on numerous boards of organizations such as Associated Black Charities, Baltimore City Chamber of Commerce, 29th Street Community Center and NPOWER. He also serves on the development committee of the Reginald F. Lewis Museum and is a member of the Platinum Center Club based in Baltimore.
Contract Financing Program (CFP) provides financial assistance to eligible businesses in the form of direct loans. The funds may be used for working capital and the acquisition of equipment needed to begin, continue, or complete work on contracts where a majority of funds are provided by a federal, state or local government agency or utilities regulated by the Public Service Commission. Financing is limited to $2,000,000 and must be repaid during the term of the contract(s). Applicants may qualify for financing prior to contract award. Financings in the form of revolving lines of credit are renewable on an annual basis.
General Eligibility:
Maximum Policy Limits: Loans Provided Directly by MSBDFA $2,000,000
Interest Rates: Generally Prime Rate + 2% Payments: Principal and interest are payable as contract proceeds are received, in amounts satisfactory to MMG and the Authority. All Payments must be assigned to MSBDFA
Term: Duration of the Contract(s)
Use of Proceeds: Working Capital, Purchase of Machinery and Equipment, Supplies and Materials (Required to perform the contracts)