Small Business Loan Programs

HUD 108 Loan Program for Atlantic City and Portions of Atlantic County

The HUD Section 108 Loan Program is for existing for-profit businesses. (Non-profits are ineligible.) The program is intended to create jobs, revitalize communities, and increase the tax base.

Loans may be made for up to $400,000, or 40% of the project cost, whichever is lower. The HUD Section 108 Loan Program is intended to be combined with funds from the U.S. Small Business Administrations’ 504 Program, or funds from the Federal Home Loan Bank through its member institutions and other conventional bank lenders.

A borrower of the HUD Section 108 Loan Program must create one (1) full-time equivalent job for every $35,000 borrowed. The loan must be made to businesses located in census tracts with poverty rates of 30% or higher, or documentation must be provided that 51% of all jobs created are low-and-moderate income persons.

Loan monies are available for a variety of business functions, as listed below:

Working capital. Working capital may be used for labor and moving costs associated with the expansion or relocation of a project, inventory financing, and receivable financing, training, and marketing financing. Working capital expenses will only be considered in conjunction with the total project, and it will not be financed independently. Repayment terms are up to a maximum of ten (10) years. Loan-to-value is 70% for receivables and 50% for inventory.
Renovation and new construction of commercial/industrial buildings. Repayment terms up to a maximum of twenty (20) years.
Acquisition of commercial/industrial land and buildings. Repayment terms up to twenty (20) years. Loan-to-value up to 100%.
Acquisition and installation of machinery and equipment. Repayment terms up to a maximum of the economic life of the machinery and equipment, or ten (10) years, whichever is less. Loan-to-value is 80% for new equipment, and 90% for used equipment.
Refinancing of existing debt to an independent institutional lender (as part of a new project that creates new job opportunities).

Funds cannot be used to reimburse for costs incurred prior to the Atlantic County Improvement Authority (ACIA) completing a HUD Environmental Review, except for planning costs of the project.

Application Fees & Requirements

Independent credit investigations are conducted on the applicant, and the principal owners and investors. A non-refundable fee of $250 is payable at the time an application is submitted. The applicant will pay 3% of the total HUD Section 108 Loan amount due at the time of closing. The applicant will be responsible for all other fees, including bank, SBA, and institutional lender fees, appraisal and environmental fees, legal fees from outside firms, and the ACIA attorney’s office, and any other fees. Applicants will receive a Good-Faith Estimate of the projected ACIA fees, which may or may not be adjusted at closing.

Environmental Review

All proposed projects are subject to an Environmental Review. All funded projects are required to comply with federal, state and local statutes, regulations and requirements including, but not limited to, the Davis-Bacon Act, Workers Compensation, Section 3 of the Housing and Community Development Act, and insurance requirements.

The Section 108 Program should not provide funds to replace traditional conventional financing, or the use of the personal resources of the borrower and his family members and supporters. Borrowers should clearly demonstrate that they have the skill sets necessary to make the business a success. In those instances in which this is clearly not demonstrated, arrangements for technical assistance must be made available and used prior to the issuance of a loan. Ongoing technical assistance may also be needed, and the willingness of a borrower to accept such assistance is also crucial.

Disclaimer: Businesses involved in gambling, pornography, illicit activities, or affiliated with such activities, are prohibited from applying for the program.