Orange County and Chapel Hill need a Certified Development Company (CDC). A CDC is a private, nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the Small Business Administration and private sector lenders to provide financing to small businesses.

With a CDC, the community can access the 504 loan program, which is a long-term financing tool for economic development within a community. The 504 Program provides small businesses requiring "brick and mortar" financing with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

Orange County is crying out for such an organization. A CDC's regulatory and statutory goals with green businesses and projects are aligned with the goals of the Orange County and Chapel Hill electorate.

The need for greater economic development in Orange County and Chapel Hill is clear. Once the country emerges from the Great Recession, inflation will set back in. Either Orange County and Chapel Hill increase their commercial tax base or they must increase residential property tax yet again to be able to maintain the same standards for their educational systems and community services.

Here's what a typical 504 project includes: A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost; a loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture with a junior lien covering up to 40 percent of the total cost; and a contribution from the borrower of at least 10 percent equity.

Proceeds from 504 loans must be used for fixed asset projects, such as: Purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

To be eligible for a CDC/504 loan, the business must be operated for profit and fall within the size standards set by the Small Business Administration. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

The maximum SBA debenture is $1.5 million when meeting the job creation criteria or a community development goal. A debenture is a type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Generally, a business must create or retain one job for every $65,000 provided by the SBA except for small manufacturers, which have a $100,000 job creation or retention goal. The CDC can lend you up to 40 percent of the project cost with a dollar cap of $1.5 million.

CDCs can exceed $1.5 million and go up to $2 million of SBA 504 financing under certain public policy, community development, and small manufacturing goals.

The public policy goals are: Revitalize a business district of a community with a written revitalization or development plan, expand exports, expand minority business development (owned 51 percent or more by minority business person), aiding rural development, change necessitated by federal budget cutbacks, change required by mandated standard re health, safety, environment, increase productivity and competitiveness (retooling, robotics, or modernization), expand female-owned business development, expand veteran-owned business development, and incorporate energy-saving technologies for sustainable design.

The community development goals include the following: Help to improve, diversify or stabilize the economy of the locality, stimulate other business development in the community, bring new income into the community, assist manufacturing firms, and assist businesses in a labor surplus area.

In addition, the 504 loans can be up to $4 million for the following: Eligible manufacturing projects; projects that generate renewable energy such as solar, wind or geothermal; and small businesses wishing to purchase, construct or retro-fit facilities incorporating energy saving technologies that result in a 10 percent decrease in energy consumption.

A CDC job is to: market the 504 program; package and process 504 loan applications; and close and service 504 loans in its area of operation. Its portfolio must be diversified by business sector. A CDC must provide small businesses with financial and technical assistance, or help small businesses obtain assistance from other sources, including preparing, closing and servicing loans under contract with lenders in SBA's 7(a) Loan Program. Finally, a CDC must loan amounts to the borrower equal to the value of all or part of the borrower's contribution to a project in the form of cash or land, including site improvements.

A CDC must be a nonprofit corporation in good standing, have at least 25 members representing: government organizations responsible for economic development in the area of operation and acceptable to SBA; financial institutions that provide commercial long-term fixed asset financing in the area of operation; community organizations dedicated to economic development in the area of operation, such as chambers of commerce, foundations, trade associations, colleges, or universities; and businesses in the area of operation.

There are some additional requirements listed in 13 CFR 120.822. A CDC needs to have a board of directors chosen from the membership, and representing at least three of the four membership groups and other requirements as set out in 13 CFR 120.823.

A CDC must have full-time professional management, including an executive director (or the equivalent) managing daily operations and a full-time professional staff qualified by training and experience to market the 504 Program; package and process loan applications; close loans; service, and, if authorized by SBA, liquidate the loan portfolio; and sustain a sufficient level of service and activity in the area of operation.

CDCs may obtain, under written contract and with prior approval from SBA, marketing, packaging, processing, closing, servicing or liquidation services by qualified individuals and entities who live or do business in the CDC's area of operation. Finally, a CDC must meet a minimum level of lending activity, providing at least two 504 loan approvals each full fiscal year. A CDC's portfolio must reflect an average of one job opportunity per $65,000 of 504 loan funding.

The time has come for our community to come together and form a CDC.

Jeremy Todd Browner maintains a solo law practice in Chapel Hill.