Financing FAQs

Frequently Asked Questions About Financing with CEI

Must I use my own money or try to borrow from a bank before coming to the CEI?
Like most other financial institutions, CEI expects an owner contribution, but the amount depends on the size of the loan and the use of the funds.  One does not need to go to a bank first before applying for a loan with CEI.

What services can CEI provide for me that my bank cannot?
Unlike banks, CEI offers business owners technical assistance, workforce development services and free ongoing business counseling, both before and after your loan.  We have industry-specific experts available to work with you in areas such as agriculture, fisheries and energy efficiency/renewables. To learn more about CEI’s sector-specific program work, see our Consulting page.

What is the advantage of financing my business with CEI?
CEI works in partnership with you to start and grow your business.  We offer a variety of financing options, from microloans to equity investments, with no prepayment penalties or application fees.  Our finance officers work with you to develop the financing structure that best fits your business, and can often offer seasonal, flexible repayment options.

Do you have any grants to start or grow/expand a business?
In general, CEI does not make grants. However, periodically and on a limited basis, CEI may be able to provide grants to train employees. Our business counselors can help you research available grant programs. At this time, the only grants available are related to technology and research development. More information on this topic can be found on these websites: The Maine Technology Institute (www.mainetechnology.org) and Small Business Innovation Research (www.SBIR.gov).

In what U.S. States does CEI offer small business financing?
CEI’s primary market is Maine. Through its subsidiaries, CEI is able to provide financing for projects in northern New England and rural areas in other parts of the US.

Does CEI require a business plan?
CEI does require a written business plan. You will be provided a checklist of all required documents with your CEI loan application packet. If you need assistance preparing your business plan, you can get the help you need by contacting the Maine Small Business Development Center (www.mainesbdc.org), Women’s Business Center at CEI (www.wbcmaine.org), StartSmart or the Service Core of Retired Executives. (www.score.org). There is no charge for these business counseling services.

What are the 5 Cs of credit CEI uses when considering a loan request?

  • Character is the general impression you make on the prospective lender or investor. The lender will form a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan or generate a return on funds invested in your company. Your credit score does play an important role when applying for a loan. Upon review of the score, CEI may require additional collateral and/or a guarantor to secure the loan. Your educational background and experience in business and in your industry will be considered. The quality of your references and the background and experience levels of your employees may also be reviewed. (Example: previous repayment history and resumes.)
  • Capacity to repay the loan is the most critical of the five factors; it is the primary source of repayment – cash. The prospective lender will want to know exactly how you intend to repay the loan. The lender will consider the cash flow from the business, the timing of the repayment, and the probability of successful repayment of the loan. Payment history on existing credit relationships – personal or commercial – is considered an indicator of future payment performance. Potential lenders also will want to know about other possible sources of repayment, such as outside employment.
  • Capital is the money you personally have invested in the business and is an indication of how much you have at risk, should the business fail. Potential lenders and investors will expect you to have contributed from your own assets and to have undertaken personal financial risk to establish the business before asking them to commit any funding.
  • Collateral or Guarantor are additional forms of security you can provide the lender. Giving a lender collateral means that you pledge an asset you or the business owns, such as your home or the business assets, to the lender with the agreement that it will be the repayment source in case you can’t repay the loan.  In general, 100% collateral coverage is required – in other words, a $50,000 loan requires collateral worth $50,000. A guarantor is a person who agrees to repay the loan if you are unable to. Some lenders may require such a guarantee in addition to collateral as security for a loan.
  • Conditions describe the intended purpose of the loan. Will the money be used for working capital, additional equipment or inventory? The lender will also consider local economic conditions and the overall business climate, both within your industry and in other industries that could affect your business.

Can I submit my loan application online?
No, but you can fill out the application online before printing. All applications must be signed and submitted by mail.

What fees are required when submitting my application?
CEI does not charge any application fees.

If I submit an application, generally how long does it take to hear back regarding approval?
It may depend on the amount being requested, the complexity of the request and the preparedness of the borrower.  The presentations and levels of approval vary based on these facts.  Typical things that may delay a request are change in employment, increase in start-up costs, a delay in appraisal or lower than expected value, failure to submit requested documents (tax returns, financial projections/incomplete business plan). We would advise you to meet with a business counselor to help facilitate the process more efficiently and timely. Generally speaking, however, once a complete application has been submitted, it will take up to 30 days to hear a decision.

What interest rates does CEI charge?
The interest rate varies depending on the strength of the proposal, the type of financing, the risk, and the source of funding.

Why does CEI ask for my personal information, such as gender, race, income level, etc? What does CEI do with that information? Do my answers affect my ability to get a loan?
Many of CEI’s funders require us to report certain demographic information on the populations we serve. In addition, CEI uses this information internally to measure the impact, both social and economic, of our work in local, state and the broader communities. We report only in aggregate (example: the number of jobs created, the number of low-income clients counseled, the number of women-owned businesses financed, etc.) and never share your personal identifying information without your express written consent.

How will I know if my loan application has been approved?
You will be contacted by your loan officer; formal approval will come in the form of a commitment letter.

Do you provide an Islamic financing product?
CEI offers two Muslim compliant (non-interest bearing) loans: Murabaha and Fee-for-Service loans.  The Murabaha loan is a profit-plus-cost loan. Fee-for-Service loans are used for other commercial lending needs.   Neither loan charges interest; both are open to all borrowers. These loans are no more advantageous financially than are interest-bearing loans.

What is a guarantor and why might I need one in order to get a loan from CEI?
A guarantor is a person who guarantees to pay for someone else’s debt if he or she should default on a loan obligation. The guarantor acts as a co-signor of sorts, in that they pledge their own assets if a situation arises in which the original debtor cannot meet their obligations. A guarantor may be necessary in instances where the borrower or business has poor or limited credit history, insufficient collateral, or lack of equity.  CEI also requires all loans be guaranteed by the owner(s) of the business. Any person who owns 20% or more of a business will be required to provide an unlimited personal guaranty.

What is collateral and how does the amount of collateral I have impact my ability to get a loan?
Collateral is personal or business assets pledged to a lender until a loan is repaid. If the borrower defaults on the loan, the lender has the legal right to seize the collateral and sell it to pay off the loan.  CEI encourages 1:1 collateral coverage, that is, we like to see the same amount pledged as the loan request.

For New and Existing Loan Clients

What other documents might CEI require after my loan is approved?
If the borrowing entity is a Limited Liability Company (LLC), CEI will need copies of the Articles of Organization, the Operating Agreement and the Borrowing Resolution(s). If the borrowing entity is a Corporation, CEI will need copies of the Articles of Corporation, the By-Laws and the Borrowing Resolution(s). CEI will also need proof of insurance on all collateral to be pledged.

What fees will be collected at my loan closing?
You may be required to pay: an origination fee (in most cases, 1% of loan amount, but may vary depending on the loan program utilized); a documentation fee (based on the size of loan); outside legal fees as appropriate; and/or collateral verification and recording fees (mortgage recording, mortgage title update, UCC search, motor vehicle title filing and UCC filing, etc.)

How long before a closing is scheduled?
Depending on the complexity of your loan, the closing process may take one to two weeks or longer. If you have special circumstances that require an expedited process, be sure to let your loan officer know.

Are there prepayment penalties?
In most cases, CEI does not charge prepayment penalties; however, there are exceptions.

Can I make my payment online?
Not at this time. CEI accepts two methods of payment:  by mail (CEI, Att: Loan Services Department, P.O. Box 268, Wiscasset, Maine 04578) or through Consumer Authorization for Direct Payment VIA ACH Debits.

What is an Automatic Clearing House (ACH) payment option?
ACH, an electronic payment program, provides a secure, fast and convenient way for our borrowers to schedule and manage loan payments to CEI and also helps conserve the environment by eliminating printing and mailing paper checks.

How do I enroll in CEI’s Automatic Clearing House (ACH) payment method for faster direct loan payments?
You can obtain an ACH enrollment form from your loan officer, or by downloading it here. Once the form is completed and signed, you can either mail it to the CEI Loan Servicing Department at the address on the enrollment form, or fax it to 207-882-5047 to the attention of Loan Servicing Department.

Can I view my loan account/history online?
Not at this time.

Who do I call if I have questions regarding my loan payment?
Please contact the Loan Services Department at CEI at 207-882-7552 with any questions you have about your loan payment, interest paid or balance due.

Who do I call if I need to make any changes to my loan, such as term, payment amount, collateral, etc?
To make these types of changes, you will need to call your loan officer directly.

How is the interest calculated on my loan?
The principal balance is multiplied by the interest rate and divided by 360. This is the Daily Accrual Factor (Per Diem) multiplied by the number of days between payments received.

How are my payments applied?
Your payment will be applied to the following, in order: interest, principal, escrow, and late charges.

Other than my loan payment, what other documents may CEI require annually?
Each year, you will need to provide CEI with evidence of insurance coverage on the collateral, the borrower’s income tax returns, and updated financial statements.