Tag Archives: development
The Truth about State Unclaimed Money
The unclaimed money menace has hardly left any state treasury untouched with an ever increasing influx of unclaimed money and in comparison, a very low number of claims being made. The logistic and bureaucratic mess created by the uncontrolled addition of unclaimed money has given a lot of headache to most of the state treasuries.
It is not surprising that the reimbursement of unclaimed funds has become the first priority for all the state treasuries. Facing these additional financial burdens in these times of economic slump is an unavoidable burden for most of the state governments. The center on Budget and Policy Priorities has been questioning states regarding the budget deficit and what are the plans to minimize it. It estimates that the combined state budget deficit over the next two and a half years is likely to be about $350 billion. This will account for about 20% of the state budget.
The state governments are at a complete loss as to how to manage the increasing pile of this government unclaimed money. More money is being added relentlessly every quarter and the trend continues to speed up with no signs of increasing claim. In order to tackle this unclaimed property menace, the states are forced to adopt new and out-of-the-box strategies in order to create a healthier and stable environment for its residents. Larger states, like California and New York, find themselves in a greater dilemma because of the increasing budget deficit on one hand and the surmounting volume of state unclaimed money on the other.
One of the common refrains of the state government is that there are so many welfare programs which are waiting to be implemented for the lack of funds while unclaimed property vault continues grow larger. Many of the law makers, in states like California and Delaware, have been proposing new ways of utilizing the state unclaimed money towards the social welfare and development projects. These states have taken the first proactive steps and have proposed the utilization of unclaimed funds effectively to fill in the budgetary deficits.
A consensus has emerged whereby the decision makers have agreed to implement the various welfare programs and other development projects without any delay in all the states. It is now universally agreed that while the money should be lawfully returned to the owner, in the absence of any body coming forward to claim it, it is prudent that these vast amount of unclaimed money is diverted toward the social development projects. It is increasingly seen that the decision makers are actively supporting the idea of unclaimed property auction. Apart from a few dissenting voices, this idea is getting a lot of support from everybody, including the citizens of the state.
In addition to the state unclaimed money, there is an equally large number of unclaimed properties that are waiting to be claimed. States like Delaware and California have started the public auction of unclaimed properties in the state, and this has contributed immensely towards the boosting of state economies resulting in the increase of state revenues by more than10%.
Understanding 504 SBA Loans
When a business is looking for a long-term, fixed rate loan for major asset purchases, a good financing vehicle for that is the SBA 504 loan program. Proceeds from these loans must be used to purchase fixed assets such as land and improvements to buildings, streets, utilities, parking lots and landscaping. The loan can also be used to construct a new building and purchase machinery and equipment. If new equipment is bought, it has to have a useful life and for at least ten years.
The 504 SBA Loan operates as a partnership between a third party lender, a certified development company and the borrower. These types of loans offer many benefits to business owners, including low down payments, below market fixed interest rates and long-term financing.
There are several criteria for qualifying for a loan, including the fact that the business must be a for-profit company with a net worth of less than $7 million. The SBA also sets caps on the net income of the business. The business applicant has to be the primary user of a facility, with a minimum percentage of 51 percent for an existing building, and 60 percent for a new building. A new job has to be created for every $35,000 provided by a Certified Development Company. Passive investment companies, non-profit companies, lending institutions and real estate development companies are not eligible for the 504 SBA Loan.
There are three parts to an SBA 504 Loan. The first part is a mortgage provided by a commercial lender, which can take up to 50 percent of the cost. This carries its own interest rate, terms and conditions. The second part is a loan through a certified development company, which can take up to forty percent with a maximum debenture amount of $1,500,000 for most businesses, $2,000,000 when meeting defined public policy goals, and $4,000,000 for eligible small manufacturers. This term can be as long as twenty years, with ten years for equipment. The interest rate for this is fixed and usually below market. The third part of the payment comes from the borrower, at around ten percent of the total cost. If the business is new, or a new facility is being built with the loan, the borrower may have to contribute as much as twenty percent. The down payment can be cash, equity in land, a building or existing equipment.
As the SBA 504 program can only be utilized to finance fixed assets, it is not the most ideal program if a prospective buyer wants to finance the purchase of an existing business. Goodwill, working capital, and other intangible assets are typically not eligible under the 504 program. This is also a program for “new money” and it cannot be used for refinance. If someone needs to refinance or needs to do a highly leveraged loan that is short on collateral, the SBA 7a program may be a viable alternative. Get more information