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State launches new loan assistance program for small businesses
OLYMPIA — The Washington State Department of Commerce has a new revolving loan fund that will help increase access to credit through the Washington Small Business Credit Initiative.
Small businesses are a key engine of growth in our state economy, accounting for more than 40 percent of all private-sector jobs and over $200 billion in gross revenue last year, yet they often struggle getting conventional loans to help them expand.
Using funds received from the U.S. Treasury Department’s State Small Business Credit Initiative (SSBCI), Washington’s new Collateral Support Program, a new self-sustaining loan program for the state, will support efforts by local banks to lend funds to small businesses.
SSBCI funds will reduce banks’ credit risks and help programs developed by the state to use U.S. Small Business Administration (SBA) loans to finance more businesses. Since 2011, the Washington State Small Business Credit Initiative programs have deployed over $14 million in SSBCI funds to lenders and small businesses throughout the state.Finding ways to increase the flow of capital to credit-worthy enterprises is crucial to growing our state economy,” said Gov. Jay Inslee.
“I congratulate the Department of Commerce for its creativity and collaborative work with federal and private sector partners to launch this important new program.”
“The U.S. Treasury Department’s State Small Business Credit Initiative allows each state to design its own small business support programs in response to local economic conditions and capital needs,” said State Small Business Credit Initiative Director Cliff Kellogg. “These federal funds have helped support small businesses in Washington State, and now they will give way to a new state initiative to provide even more resources to small businesses.”
The new Collateral Support Program will allow businesses to continue working with their current bank to access funding available through the SBA 504 loan program. SSBCI provides financing by providing cash collateral for small businesses that lack the necessary collateral to qualify for bridge loan.
The new program will mitigate a lender’s risk during the interim period before an SBA-guaranteed loan is in place. For example, it may cover a construction loan while an SBA 504 loan provides permanent takeout financing.
Most small businesses can qualify for the new Collateral Support Program, and most SBA 504 loan purposes qualify.
Examples of qualifying business loans include: heavy equipment, acquisition of a place of business, and construction, or renovation of a place of business.
Commerce is working to quickly enroll and approve more banks, credit unions, savings associations, and other business lenders in the program. Benefits to lenders include minimal reporting requirements, expanded small business customer base and higher lending limits.
Lenders and businesses interested in learning more about the Washington Small Business Credit Initiative and the new Collateral Support Program, may contact Jane Swanson, Commerce Program Manager, 206-256-6155, or email WSBCI@commerce.wa.gov, or visit www.commerce.wa.gov.