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The Small Business Administration Certified Development Company Program Introduction have an economic life of 40 to 50 years, thus some home mortgages are 25 to 30 years. Large businesses can sell The Certified Development Company bonds [debentures) or get other types of long-term financ- ing for factory, buildings or equipment. The Small Business Administration's Certified Develop- ment Company Program ,,,.,as enacted on July 2, 1980, as Long~term financing for commercial or industrial proper- an amendment to the Small Business Investment Act of ty for small businesses, however is more difficult to ob- tain. There are few readily available sources, particularly 1958. The program's purpose is to help communities by in distressed areas. Yet small businesses need long-term stimulating th~ growth and expansion of small businesses within a defined area of operation. SBA-certified devel- financing for land improvements and expansion. opment companies organized under provisions of Section 503 will provide long-term, fixed asset financing. By pro- The Certified Development Company Program allows riding this service, the program will enable communities private lenders to meet these long-term credit needs to create jobs, increase their local tax base. expand busi- through SBA-supported loans, based on subordinate SBA ness ownership opportunities and offer improved corn- second mortgage financings in the form of 100% SBA- munity services. In addition, the program is a flexible guaranteed debentures. economic development tool that can be used for other purposes such as cit5, or regional development, neighbor- hood revitalization and minority enterprise development. Through this ioint federal government/private sector pro- gram. financing for the acquisition of land and building constraction, expansion, renovation, and equipment is available to small business concerns for up to 25 years. Importance of Small Business Small Business contributes iobs, innovation, and healthy competitiqn to the American economy. Small businesses account for over 50% of the private sector employment in the country. More important, small businesses generate 60% to 70% of all new private sector jobs, the lifeblood of a healthy free enterprise economy. Small businesses have also accounted for half of all innovations and new technologies in this century. The Long Term Credit Gap A long term credit gap exists for small and medium.size businesses in this country. Most commercial bank~ are predominantly short to medium-term lenders (five to 10 years); most savings institutions are legally required to be residential lenders; and the majority of insurance com- panies and pension funds prefer large projects of over $1 million. Why is Iong4erm financing important? Financial institm tions relate the life of a loan to the value of the asset being financed, For example, automobiles have an econ- omic life of [our to five years, so they generally qualify for three or four years financing. Single family homes 1