So, you’re looking for financing! We thank you for considering NEDCO. Below is a guide to seeking a loan with NEDCO that should answer many of your questions. If you have additional questions, please do not hesitate to contact Celina Tchida at 480-258-6932 or ctchida@nedcoaz.org.

THE PRODUCT

NEDCO provides $5,000 to $50,000 loans to start-ups and expanding small businesses. We acquire funding through 3 primary sources and lend the funding to small business. The 3 primary sources are Advantage MCA, Entrust and We also fund through Advanced These are loans that traditional banks often will not consider either because they are too small, or in the case of start-ups, considered too risky. NEDCO loans are predominantly used for the following:

• Equipment
• Line of Credit
• Real Estate Acquisition
• Working Capital

Note: this list is not all-encompassing; there may be cases in which a NEDCO loan may be used in other ways. Additionally, NEDCO may participate in a larger loan with a partner such as the Local Initiatives Support Corporation or Raza Development Fund. If you are seeking a loan that does not fit the above categories, please contact us.

WHO WE SERVE

NEDCO is a certified Community Development Financial Institution (CDFI), providing financial services to low-and moderate-income (LMI) individuals and communities. CDFIs are mission-driven financial institutions that create economic opportunity for individuals and small businesses, quality affordable housing, and essential community services throughout the United States. We also offer consultation and mentoring for those companies who may need a credit card solution for their business. NEDCO is a CDFI with a mission focus on small businesses and job creation.

What does this mean? First of all, this means we prioritize businesses within low-to-moderate income areas. You can check your address for this qualification here. If your business does not meet this qualification, your loan will be contingent on quality job-creation for low-to-moderate income individuals.

Note: CD banks must meet the same safety and soundness, statutory, regulatory, business planning, and procedural requirements as all other national banks. Learn more about CDFIs here: http://www.occ.gov/topics/community-affairs/resource-directories/cd-bank-and-financial-institution/index-cd-bank-and-financial-institution.html.

TERMS, RATES, AND FEES

The question on everyone’s mind that we can never answer… Loan repayment terms, interest rates, and fees vary according to several factors:

• Loan amount
• Planned use of funds
• Loan pool (defined by use of funds and location of business)
• Needs of the small business borrower

That said, repayment on a term loan is typically within three to seven years. Lines of credit are extended for periods of one year, but may be renewed annually. Depending on various qualifications, interest rates will generally be between three and nine percent.

TIMELINE

Loan Applications are reviewed once a month by a volunteer Loan Review Committee made up of members of the banking and business communities. The following is our monthly schedule for loan application packaging and processing.

THROUGHOUT THE MONTH, our loan officer is available to work with you on putting together a complete application package.

ON THE LAST MONDAY OF THE MONTH, all complete application packages will receive an initial review by our Executive Director. If it is determined that you have a viable loan application that will be presented to the Loan Review Committee, your application fee will be deposited and a credit check will be pulled. The Executive Director may request clarification, additional information and/or additional documentation.

ON THE FIRST FRIDAY OF THE MONTH, applications will be sent to the Loan Review Committee Members to review the applications prior to their monthly meeting. Any one of the Committee Members may request clarification, additional information and/or additional documentation.

ON THE SECOND FRIDAY OF THE MONTH, the Loan Review Committee meets as a group to discuss applications and possible loan terms. Here are the possible outcomes:

• Your application is accepted, as is
• An alternative financing package, that better suits your business and our risk, may be offered
• Additional documentation or action on your part may be requested, the loan application will be held for your response to the request within a reasonably established time frame.
• The application may be denied

Note: The timeline of your complete application process is dependent on many factors. Please expect the process to take at least a month from the day you begin your application.

BEFORE YOU APPLY

Making the decision to obtain a loan is far from trivial—even what may be considered a ‘small’ business loan can either boost your company to the next level of success or lead to its ultimate loss. Before you proceed, it is important to make sure this is going to be good debt for your business.

What is good debt versus bad debt?

Well, good debt is an investment that will ultimately create value for your company. It should produce more revenue for your business than you will pay back to the lender. This is why a strong business plan, along with reasonable financial projections is key in your search for financing.

While any loan may help you initially, bad debt quickly becomes another obligatory payment every month, and does not contribute to your plans for growth.

So, ask yourself: how is this money going to make you more money? If you do not have this planned out, you may be better off without the debt of a small business loan.

WHAT WE REQUIRE

In order to put together a complete application package, we will require a decent amount of documentation. We recommend downloading and utilizing our Loan Application Document Checklist.

Administrative:

• NEDCO Loan Application
• Declination letter from a traditional lender
• Census tract or detailed job creation plan
• NEDCO PROGRAM FILE DOCUMENTS
• Photocopies of applicant(s) driver’s license(s) or other valid photo ID
• Application fee of $100 due with submitted application

Financial Information:

• 3 years’ business tax returns**
• 3 years’ company prepared business financial statements**
• 2 years of financial projections (download a template here)
• Most current A/R and A/P aging**
• 3 years’ personal tax returns of all applicants/guarantors
• Current personal financial statement of each applicant/guarantor

Business Documents:

• Business plan (download a template here)
• Organizational documents (see the Business Entity Guide for which documents apply to your organization)
• Copies of:

Note: NEDCO will obtain Credit Bureau Reports on all individuals owning 20% or more of the business.

** If you are applying for a business start-up loan, or if your business is younger than 3 years, please include as much as possible of the requested financials. Also please note that personal financials and business projections will be even more important to your application package.

HOW WE RISK-RATE

We must review the potential benefits and risks associated with each loan we consider, and each of these loans goes to a loan review committee for final approval. We assess each loan on the following categories:

• Conditions (who else is doing similar business in the area, how is the industry doing more broadly, etc.)
• Collateral (equity of the borrower that covers the amount requested)
• Capital (the borrower's financial investment in the company)
• Capacity (the capacity of the business to pay off the loan, generally hinges upon cash flow and debt service coverage)
• Character (credit report as well as portrayed responsibility and follow-through)

Note: While oftentimes traditional banks are forced to decline a loan request based on a lack in one of these categories, NEDCO takes them all into consideration and weighs them together as a whole. For instance, we will not turn a loan down to a borrower with bad credit who is submitting an otherwise healthy application.

RESOURCES

If your business is within our grant-funded business development areas, we may be able to offer direct business development services. Otherwise, here is a list of resources for businesses seeking financing:

http://maricopa-sbdc.com/what-we-offer/

https://www.sba.gov/category/navigation-structure/loans-grants

CONTACT US

If you have questions, or are ready to begin submitting documentation, please contact us today!