Small Business Administration (SBA) Loan Programs
SBA administers several loan programs. It sets the guidelines for the loans while SBA’s partners (namely lenders) make the loans to small businesses. SBA backs those loans with a guaranty that will eliminate some of the risk to the lending partners. The loan guaranty transfers the risk of borrower non-payment, up to the amount of the guaranty, from the lender to SBA. Therefore, when a business applies for an SBA Loan, they are actually applying for a commercial loan, structured according to SBA requirements, which receives an SBA guaranty. THE SBA ITSELF DOES NOT ISSUE LOANS OR OFFER GRANTS.
7(A) Loan Program
7(A) Loans are available to for-profit businesses that qualify as small under SBA size standards and cannot borrow on reasonable terms from conventional lenders without government help. These loans can be used for fixed assets, working capital and/or to finance start-ups or the purchase of an existing business. The maximum percentage of SBA guaranty on this type of loan is 85% up to $150,000 and 75% over $150,000. The maximum loan amount is $5,000,000, and maturity is set at 5 to 7 years for working capital, up to 25 years for equipment and real estate and a maximum of 10 years for other purposes. The maximum interest rate is prime plus 2-1/4% for maturities under 7 years and prime plus 2-3/4% for maturities of 7 years or longer. There are fees involved in obtaining this type of loan.
SBA Express Loan Program
The eligibility requirements for applying for an Express Loan are similar to the 7(A) Loan requirements, and an Express Loan can also be used for the same purposes. However, the SBA only guarantees this type of loan up to 50%, and the maximum loan amount is $350,000. Express Loans must be paid within 7 years, and the interest rate is higher – the bank’s prime plus 6.5% for loans of $50,000 or less and the bank’s prime plus 4.5% for those exceeding $50,000. Loan fees are required but an SBA application is not. Loan credit authority is delegated to the bank.
For more information regarding SBA’s loan programs, CLICK HERE or visit www.sba.gov/financing.
The Central Virginia Small Business Development Center is an intermediary organization and can help you prepare your loan package free of charge. For more information, CLICK HERE or contact Nora Gillespie at 434-295-8198.
To register for a free SBA online webinar about the SBA’s loan programs, CLICK HERE.
Virginia Department of Business Assistance - Virginia Small Business Financing Authority
Small Business Loan Guaranty Program
Through the Loan Guaranty Program, the Virginia Small Business Financing Authority will guarantee a portion of a loan or line of credit extended by a commercial bank to a qualified Virginia business. With a guaranty from VSBFA, the bank benefits by reducing its risk in lending to the Virginia business, and the business benefits by accessing financing it would not otherwise have been able to obtain.
The maximum guaranty under the program is 75% of the loan or line of credit up to a maximum guaranty of $500,000. The program can be used to provide a guaranty for a short-term line of credit or a term loan of up to three years in duration. An application fee of $200 must accompany the application package. If approved, a guaranty fee of 1.5% on the guaranteed portion is due at closing.
Applications for the Loan Guaranty Program are made by the bank requesting the guaranty. Unlike traditional government guaranty programs, the Loan Guaranty Program requires very limited paperwork and offers the bank great flexibility in loan structuring.
Child Care Center Financing Program
Through the Child Care Financing Program, VSBFA provides low-interest installment loans to "regulated" Providers in the Commonwealth of Virginia. A "regulated" Family Home Provider may be: 1) licensed by the Virginia Department of Social Services (DSS); 2) registered through the Voluntary Registration Program 3) part of a Licensed Family Day Care System; or 4) participating in the USDA Food Program. A "regulated" Center-based Provider may be: 1) licensed by the Virginia Department of Social Services or 2) filed as "religious-exempt" with the Virginia DSS. Both for-profit and non-profit entities are eligible to apply. Start-ups are also eligible to apply.
Loan proceeds can be used to meet or maintain childcare standards, including health, safety or fire codes or to make quality enhancements to their child care program. Loans may also be used for certain start-up costs; however, loans for building construction, working capital or to refinance or consolidate existing debt are not eligible under this program. Some examples of eligible uses include equipment purchases for infant care, playground equipment and fencing, educational materials, and children's furniture. Financing buses for transporting children is an eligible use for a child care center. Interest rates are fixed at prime minus 3%.
The maximum loan amount for Family Home Providers is $10,000 and the repayment term may be up to seven years. There is a $15.00 nonrefundable application fee. Applicants must complete the Family Home Provider application and submit to VSBFA with all attachments for consideration.
The maximum loan amount for Center-based Providers is $150,000 and the repayment term may be up to seven years. There is a $100.00 nonrefundable application fee. Applicants must complete the Center-based Provider application and submit to VSBFA with all attachments for consideration.
For more information, CLICK HERE or call Mary Jo Sisson-Vaughan, VDBA Project Finance Manager, at 804-371-8184.
Community Investment Collaborative
Community Investment Collaborative (CIC) launched in 2012 to help cultivate a local business network that connects aspiring entrepreneurs with existing entrepreneurs, City officials with nonprofit service providers, and State agents with local business people, bringing together the impressive experience and expertise found in our community.
CIC offers staged microloans up to $35,000 for graduates of their training workshop. These loans have flexible arrangements and CIC will work with the client despite weak credit or collateral. CIC offers two loan products:
- CIC Loans: CIC loans directly to entrepreneurs. Arrangements are flexible. Entrepreneurs may borrow up to $5,000 in the first stage, up to $10,000 in the second stage, and up to $30,000 in the third stage.
- Kiva Zip Loans: CIC is a trustee of Kiva Zip and endorses entrepreneurs to crowd-fund their loans on their website. Loans are two year terms and interest free. Entrepreneurs may borrow up to $5,000 in the first stage and up to $10,000 in the second stage.
Both of these opportunities require entrepreneurs to be graduates of their 17 week training workshop to be eligible to apply.