State Launches New Loan Assistance Program for Small Businesses
Department of Commerce adds an SBA Collateral Support Program to menu of credit assistance options available to businesses
Olympia, WA – The Washington State Department of Commerce today announced 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.”
“Small businesses are crucial to economic growth on Main Streets across our country,” said U.S. Senator Maria Cantwell, Chairwoman of the Senate Small Business Committee. “This expansion of the Washington Small Business Credit Initiative will help more small business owners get access to the capital they need to expand and create jobs. By helping Main Street secure financing, we can ensure that Washington state’s economy continues to grow.”
“We are excited to roll out the Collateral Support Program because it offers another financing resource to help the small businesses in our state that are so critical to our economic vitality and job growth,” said Brian Bonlender, Commerce Director. “This program is a self-sustaining solution, and will build upon the success of the existing State Small Business Credit Initiative finance programs to incentivize private lending which to date has been in excess of $54 million.”
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.
“The Collateral Support Program offered through the Washington State Department of Commerce is exciting to SBA for a variety of reasons, including how it will make our job creation-focused 504 Loan Program even more accessible to our lending partners and the small business community,” said Mark Costello, SBA Seattle District Office supervisory lender relations specialist. “Additionally, this innovative, customer-focused tool gives SBA a unique opportunity to partner with this key state agency and the private sector lending community to further drive economic growth throughout the state of Washington.”
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.