Accessing capital and locating funding are often the most difficult tasks for any company seeking to develop their products and services and grow their company. MCILEDC can work with your company to ease the credit crunch by identifying your needs and then helping to secure financing opportunities that will meet your present needs and prepare you for future growth. Loan proceeds in most cases can be used, with some exceptions, to finance real estate purchase, construction, or renovation of a building; purchase of furniture, fixtures, machinery, and equipment; working capital costs; and in some cases, debt refinance. MCILEDC can also refer you to various banks in the region who are willing to partner with the loan and guarantee programs listed below. MCILEDC stands ready to help start the process with the following programs. Contact ekoch@mciledc.com for help in accessing these loan and guarantee programs.
ILDCEO Advantage Illinois Participation Loan: The Illinois Department of Commerce and Economic Opportunity (ILDCEO) features a participation loan program that provides small Illinois businesses and entrepreneurs (750 or less across all industries) with access to the capital to start new companies and expand existing businesses. Program helps to mitigate risk by purchasing portions of a bank loan, applying below market interest rates to the ILDCEO portion (typically 2% below rate charged by bank) and subordinating exposure to that of the lending entity. Minimum participation is $10K; maximum $2M (lesser of 25% of project or 50% of loan, whichever is smaller); maximum term 10 years. Participation levels are $25K to $65K per full time employee. In addition to the usual allowable costs described above, Advantage Illinois will also cover inventory, franchise fees, business procurement, and startup costs. Program can also be used in conjunction with a Small Business Administration (SBA) 7A and SBA 504 loan.
IFA Participation Loan Program: This program allows the Illinois Finance Authority (IFA) to purchase the lesser of $500K, or a 50% participation in a loan, directly from the borrower’s lender. This strategy provides a lower blended interest rate to borrower; fixed rate up to 5 years term. To be eligible, businesses must create new or retain existing jobs.
Columbia Revolving Loan Program: The City of Columbia offers a revolving loan program in order to create jobs and support the ongoing economic health of the community. This program is designed to help businesses fill a gap in financing that is left after traditional financing methods have been exhausted. Special consideration will be given to retention / expansion of existing businesses, start-ups, firms headed by females or ethnic minorities, projects located on Main Street, and projects creating a significant number of new jobs. For a full description of the loan program or to inquire about eligibility, please visit the Columbia, IL website.
IFA Illinois Rural Development Loan Program: The Illinois Finance Authority (IFA) can finance business facilities and community development in rural communities such as the MCILEDC service area. Finances up to 75% of project cost; maximum loan of $250K with rate 2% – 6%.
SBA (504) Loans: This Small Business Administration (SBA) program provides businesses with long term, fixed rate financing for major assets, such as lands and buildings. Typically, a 504 project includes a loan secured with a senior line from a private sector lender covering up to 59% of the project cost; a loan secured with a junior lien from a local or regional community development corporation (backed by a 100% SBA-guaranteed debenture) covering up to 40% of the cost and a contribution of at least 10% equity from the small business being helped.
IFA Industrial Development Revenue Bonds: The Illinois Finance Authority (IFA) can issue federal tax-exempt Industrial Development Revenue Bonds on behalf of manufacturing companies to finance the acquisition of fixed assets. This can result in long term financing at interest rates lower than conventional financing, usually below prime. The program can finance up to 100% of project cost subject to credit approval and underwriting standards of the borrower’s bank. For most companies, bank participation is necessary and the bank makes the credit decision, structures terms, and sets collateral limits. Banks either guarantee bonds by providing direct pay letter of credit or purchase bonds directly to hold as an investment in their portfolio. Under either structure, the bank will be the secured lender. Because of upfront costs of issuance, prospective Industrial Revenue Bond financing of less than $1.5 million is generally not cost effective.
USDA-RD Business & Industry Loan Guarantees: The United States Department of Agriculture Rural Development (USDA-RD) guarantees loans for rural businesses (MCILEDC service area meets those rural requirements). In addition to customary eligible uses, the program covers easements and rights-of ways. The program cannot be used for lines of credit. Maximum amount of loan guarantee is 80% for $5M or less loans; 70% for loans $6-10M; 60% for loans exceeding $10M; $25M maximum. Terms can vary from 7 to 30 years depending upon use. A local USDA-RD office, in nearby Mt. Vernon, allows the MCILEDC to jumpstart your process by bringing their staff to the table early.
Small Business Administration (SBA) 7(a) Guaranty loan program: SBA 7(a) loans are the most basic and most used type of loan of SBA’s programs. SBA 7(a) loans are only available on a guaranty basis. Providing lenders must structure loans by SBA requirements. SBA does not fully guarantee 7(a) loans. The lender and SBA share the risk that a borrower will not be able to repay. The guaranty is a guarantee against payment default.
USDA-RD Biorefinery, Renewable Chemical, and Bio-based Product Manufacturing Assistance Guarantee Program: This is offered through the USDA Rural Development, features loan guarantees up to $250M (can’t exceed 80% of total eligible project costs) available through a semiannual request-for-proposal process. Guaranteed funds can be used for the development, construction, and retrofitting of Biorefineries and Bio-based manufacturing facilities.