Baltimore Micro Loan Program: Small Loans, Big Waves

Baltimore Micro Loan Program: Small Loans, Big Waves

By Kevin Wells, Economic Development Officer, Baltimore Development Corporation

Did you know that the Baltimore Development Corporation offers microloans to small businesses in Baltimore City?

Launched in 2013, the program, BaltimoreMICRO, has given out over 60 loans ranging from $5,000 to $30,000. Funds are available for capital purchases, such as furniture, fixtures, machinery or equipment. BaltimoreMICRO recipients have included both limited- and full-service restaurants, clothing retailers, event planners, software developers and more. Since 2015, BDC has awarded over $900,000 to 61 loan participants, predominantly women- or minority-owned business enterprises.

The loans help support early- to mid-stage business investments, particularly when traditional lending methods are not a good fit as a result of limited credit access. They are approved on a case-by-case basis and since business needs vary greatly, a phone appointment with a representative of the Baltimore Development Corporation at (410) 779-3835 is the best way to begin.

BaltimoreMICRO helps stimulate employment, assist small businesses in obtaining fixed rate financing and encourages private sector investment in Baltimore City.

More information can be found on the Baltimore Development Corporation (BDC) website or from the Small Business Resource Center (SBRC).

The Charmery was one of the first BaltimoreMICRO loan recipients in 2013.

Lucky Cup Espresso Truck also received a loan from BDC in 2013, among the first microloan recipients in Baltimore City.

Through a BDC Microloan, Mindgrub Technologies was able to relocate, procuring a 13,000 square foot space in the Phillips Building in Locust Point.

Timeline

  • Prior to applying for financing, potential applicants should discuss eligibility with a representative of the Baltimore Development Corporation or the Small Business Resource Center.
  • Submit application
  • Determination whether proposed use is consistent with program guidelines
  • Approval from BDC Loan Committee
  • Loan documents prepared
  • Loan documents executed
  • Disbursement of funds

 

Eligibility

  • Existing small businesses in Baltimore City, including retail, service providers and contractors
  • Personal credit report score of 680 or higher
  • Applicants must be for a profit entities: sole proprietor, partnership, corporation or LLC
  • Small business cannot exceed $5,000,000.00 in annual revenue

  

Eligible Use of the Funds

Any of the Following:

  • Working Capital
  • Building improvements
  • Machinery, equipment, furniture and fixtures
  • Financing City, State or Federal contracts
  • Inventory Purchase and certain other costs associated with opening or expanding a small business
  • Contract mobilization

 

Application

The BaltimoreMICRO Loan application is 6 pages, and has questions detailing business ownership and type, as well as financial information. Here, a business can specify the amount and duration of the loan, as well as its purpose. The following materials are necessary to complete an application:

  • A completed business loan application
  • Business federal tax returns or financial statements for the past three fiscal years if not a start-up
  • Interim financial statements (if available)
  • Most recent federal tax returns for two years for each principal owner listed in the first section of the business loan application
  • Personal financial statement
  • Organizational documents (Articles of Incorporation and By-Laws if a Corporation; and, Articles of Organization and Operating Agreement if an LLC, etc.)

 

 

 

 

 

 

Loan Terms

  • Minimum loan of $5,000 with a maximum loan of $30,000 not to exceed a loan to value of 95% of total project costs. Additional borrower may be required (refinancing is prohibited under this program)
  • $100.00 application fee (nonrefundable)
  • 0% closing fee of the loan amount; for example, a $20,000 loan would require a $200 fee at closing
  • Real estate related loans will incur a higher closing cost
  • Documentation preparation fee of $200 to $300 due at closing plus any filing fees and credit report fees
  • Interest rate to be determined upon approval, but not to exceed 8.0% over the Wall Street Journal Prime Rate
  • Loan term is based upon use of funds but not to exceed 7 years
  • Personal guarantees required
  • Collateral may be required
  • No prepayment penalties

 

Loan Guidelines

  • Project viability and potential
  • Commercial improvements
  • Impact of the project on its neighborhood
  • Introduction of needed goods or services to a neighborhood
  • Potential creation of new jobs
  • Readiness to proceed
  • All federal, state, and local taxes must be up-to-date
  • No outstanding judgments or liens

 

Restrictions

Priority is given to projects that strengthen neighborhood commercial districts and are part of a greater revitalization strategy. The following types of projects and activities will not be considered for BaltimoreMICRO financing:

  • Speculative developments or Real Estate Investment properties
  • Housing or rental properties
  • Refinancing
  • Facilities such as: community halls, fire stations, hospitals, colleges or universities. Adult bookstores, adult video shops, other adult entertainment facilities, gambling facilities, gun shops, liquor stores, blood or plasma donor center, massage parlors, pawn shops or tanning salons

 

 

For additional information on BaltimoreMICRO or to determine a program of best fit, please contact Jeff Pillas of the Baltimore Development Corporation or Paul Taylor of the Small Business Resource Center.