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Business Development Advance

Business Development Advance Overview

Reservation requests for subsidized advance funding through our 0% Interest Rate Business Development Advance have exceeded the available program amount. New requests will be added to our waitlist. In the event that other members relinquish any of their reserved funds, we will continue to fill reservation requests for members on the waitlist.

Another round of subsidized advance funding is available through our 0% Interest Rate Business Development Advance (BDA) to assist our members in providing loans at advantageous rates to qualifying small businesses* to promote community and economic growth.

The BDA is subsidized funding in the form of interest rate credits and a total of $5 million1 of interest rate credits is available this year. Members can request to reserve interest rate credits up to $200,000 on a first-come, first-served basis through the BDA Reservation Request Form. Completed forms can be sent to [email protected]. The submission of qualifying loans and execution of the BDA funding must be completed before year-end 2022.

Benefits to Members:

  • Supports communities by helping local businesses with their funding needs at competitive interest rates
  • Provides members with a competitive advantage when bidding for small business loans
  • Affords business opportunities for members when marketing to new customers and creates value for existing customers
  • Offers a reasonable spread for members’ small business lending activities

*As defined by the Small Business Administration (SBA) using the North American Industry Classification System (NAICS) Codes. The loan does not have to be a SBA loan.

Program Guidelines:

Advance Attributes

Structure

Program Cap1

$5 million in subsidized funding in the form of interest rate credits has been allocated to the Program

Member Cap2

Up to $200,000 in subsidized interest rate credits per member

Minimum Term

1-year minimum

Maximum Term

3-year maximum

Eligible Advance Types

Fixed-Rate Advances

1An additional $1 million in subsidized funding was added to the Program Cap on September 13, 2022.

2Individual member’s interest rate credit cap is $200,000 and calculated using the interest rate of the Advance at the time of booking. The interest rate subsidy will be credited back to members’ accounts monthly, over the life of the Advance.

Reservations under the Program will be approved on a first-come, first-served basis so long as funds are still available within the Program and Member caps. Members can request to reserve funds through the BDA Reservation Request Form.

Advances will be transacted in the same manner as traditional Advances, in adherence with all credit, collateral, and capital stock requirements.

Loan Submission Guidelines:

Loan Attributes

Structure

Qualifications

Fixed rate loans to small businesses qualify for the program: 1) if defined as a small business by the Small Business Administration (SBA) using North American Industry Classification System (NAICS) Codes, or 2) when using an SBA note

Rate Markup

Members may charge a reasonable markup over the zero percent Advance, but cannot exceed a 5.50% coupon

Qualified Loans

Qualified fixed rate loans must be submitted, and the Business Development Advance must be executed prior to year end 2022

Loan Submissions3

Loans can be submitted individually or pooled together for qualification under the Program

Certification

Members must certify that their loan submission(s) meet the program’s qualification and rate mark up criteria

3The Advance amount must be equal to or less than the loan(s) originated. Advance requests in excess of the maximum per member interest rate credit cap of $200,000 may be eligible for other discounted funding under the Community Lending Program

Mechanics of the BDA:

BDA Mechanics 081022

*Rate used is an example and rounded for ease of illustration – as of 8/3/2022

Key Contacts

Relationship Managers:
(212) 441-6700
MSD Team
(212) 441-6600
[email protected]

CLP System

Members must enroll in our CLP system to access our Community Lending Programs, including BDA

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BDA Overview

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Introduction to the BDA Recording

View this highly informative webinar and learn about how your institution can benefit from the BDA.

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