Alternative Financing Options

When traditional bank financing is not readily available, private and nonprofit organizations can still access capital through alternative funding sources. A wide range of options—including grants for R&D, equipment purchase, training, and employee retention—has emerged in recent years.

Here are representative programs in Massachusetts, New York, and Rhode Island.

MASSACHUSETTS FINANCIAL RESOURCES

BDC Capital
The oldest continuing business development corporation in the United States, BDC Capital has been recognized locally and nationally as a leader and innovator in business lending and capital investment. We are a private company in which many financial institutions in New England have pooled their money to share the risks of helping promising companies expand.

BDC Capital provides term loans as senior or secondary debt and community loans for women-owned, minority-owned, and not-for-profit businesses. Many of the loan programs will lend up to $2.5 million. Up to $5 million is available for individual mezzanine and equity investments. It also makes SBA 504 real estate and equipment loans available through its affiliate, New England Certified Development Corp.

Website: www.mass-business.com

Commonwealth Corporation
Commonwealth Corporation works to advance the skill development of youth and adults in Massachusetts and works with partners in workforce, education, business, and labor.

Services for businesses include the Applicant Assistance Program for the Workforce Training Fund, the Economic Stabilization Trust, Employee Involvement and Ownership, and Older Worker Retention Strategies.

Website: www.commcorp.org

Emerging Technology Fund
Supports innovation and growth in Massachusetts by providing loans and guarantees for technology-based manufacturing facilities and equipment. Provides loans up to $2.5 million for purchasing equipment, improving leased space, or acquiring and renovating facilities. The fund is targeted at emerging technology industries, including biopharmaceutical companies.

Website: www.massdevelopment.com/financing/lg_technology.aspx

Massachusetts Community Development Finance Corporation (CDFC)
CDFC is a quasi-public corporation authorized by the Massachusetts legislature in 1975 as one of the nation’s first state-level community economic development finance institutions. Its core mission is to bring new economic activity and good quality jobs to Massachusetts’ low-income areas working in conjunction with community development corporations (CDCs).

CDFC provides small businesses with lines of credit, term loans, and surety bond financing support. CDFC extends term loans and lines of credit of up to $500,000 to small businesses, often in conjunction with private lenders.

Website: www.mcdfc.com

Nonprofit Finance Fund
A national leader in financing nonprofits, the Nonprofit Finance Fund serves nonprofits and their funders, offering an integrated package of financial and advisory services, including facilities and working capital loans and lines of credit and asset-building programs, as well as intensive workshops and other consultations to help nonprofit management understand the impact on their finances of management and program decisions.

Website: www.nonprofitfinancefund.org/location.php?autoID=44

PCI Fund
As the result of state legislation, thirteen Massachusetts-based property and casualty insurance companies established the state-wide Property and Casualty Initiative, LLC (PCI) to promote economic development by providing loans that improve the health and welfare of low income residents and communities across Massachusetts.

The Property and Casualty Initiative has four objectives:

1. Finance the production and maintenance of affordable housing
2. Stimulate economic development in Massachusetts
3. Provide growth capital and equipment financing for businesses and organizations
4. Promote the expansion of community services for low and moderate-income residents.

Loan sizes range from a minimum of $250,000 up to $5,000,000.

Website: www.pcifund.com

NEW YORK FINANCIAL RESOURCES

Empire State Certified Development Corporation
Empire State CDC, doing business as The 504 Company, is licensed by the U.S. Small Business Administration (SBA) to provide the SBA 504 Loan Program to eligible businesses in New York State. It will lend up to $1.5 million for standard loans, $2 million for public policy loans, and $4 million for manufacturing loans.

Website: www.nybdc.com/CorpProfilenescdc.htm

New York Business Development Corporation
New York Business Development Corporation (NYBDC) is a private corporation funded by over 160 New York State commercial banks and thrift institutions. Its mandate includes promoting employment and economic development throughout New York State through long-term loans—up to $1.3 million—to creditworthy small and medium-size businesses. It will make larger loans available by bringing in other lending partners.

Website: www.nybdc.com/CorpProfilenybdc.htm

New York City Economic Development Corporation
New York City Economic Development Corporation is the city's primary vehicle for promoting economic growth in each of the five boroughs. Financing opportunities provided through the New York City Industrial Development Agency include issuing lower-cost tax-exempt bonds and providing tax benefits to acquire or improve capital assets, such as purchasing real estate, constructing or renovating facilities, and acquiring new equipment.

Website: www.nycedc.com

Nonprofit Finance Fund
A national leader in financing nonprofits, the Nonprofit Finance Fund serves nonprofits and their funders, offering an integrated package of financial and advisory services, including facilities and working capital loans and lines of credit and asset-building programs, as well as intensive workshops and other consultations to help nonprofit management understand the impact on their finances of management and program decisions.

Website: www.nonprofitfinancefund.org/location.php?autoID=39

Statewide Zone Capital Corporation
Statewide Zone Capital Corporation is a privately owned loan and investment fund that makes financing available to existing and new businesses in New York’s 51 participating Empire Zones. Loans range from $30,000 to $300,000 and may be used for working capital, real estate, leasehold improvements, machinery and equipment, relocation, business acquisitions, and some debt refinancing.

Website: www.nybdc.com/empirezone.htm

RHODE ISLAND FINANCIAL RESOURCES

Business Development Company of Rhode Island
The state’s leading non-bank lender to established and emerging businesses in Rhode Island. Provides direct and gap financing to companies that need funding for working capital, product development, fixed asset purchases, and business acquisition.

The BDCRI will provide up to $500,000 in gap financing for any single transaction and can bring in other partners for deals up to $3.5 million.

Website: www.bdcri.com

Nonprofit Finance Fund
A national leader in financing nonprofits, the Nonprofit Finance Fund serves nonprofits and their funders, offering an integrated package of financial and advisory services, including facilities and working capital loans and lines of credit and asset-building programs, as well as intensive workshops and other consultations to help nonprofit management understand the impact on their finances of management and program decisions.

Website: www.nonprofitfinancefund.org/location.php?autoID=44

Rhode Island Economic Development Corporation
Programs include tax exempt revenue for companies exploring various manufacturing projects; the Enterprise Zone Program, which offers tax incentives to businesses that expand their workforce at facilities located in one of 10 state enterprise zones; mortgage insurance; a micro-business loan program; and loans and equity-like investments to developers and not-for-profit organizations involved in the revitalization of commercial properties in urban areas

Website: www.riedc.com