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Government Guarantee Loan Program

There is a GOVERNMENT GUARANTEED LOAN PROGRAM available to businesses. This Federal program guarantees loans made by lenders to businesses and industries up to 10 million dollars. I have worked with several banks in the area putting together the necessary loan packages and documentation for Clients. If you are looking to refinance your real estate property or reduce your interest cost, I would welcome an opportunity to discuss this program with you.
This Federal Program offers several advantages to borrowers and lenders alike:
  • Borrowers are more likely to get approved by the bank with the guarantee.
  • Borrowers typically receive a more favorable rate from the bank due to reduced risk for the Bank.
  • Repayment terms are longer and more favorable.
  • Inventory and receivable financing is available.
  • This Federal program differs from traditional loan programs because there is no requirement that applicants be unable to obtain credit from other sources.
  • The Bank is not required to apply the guarantee portion of the loan against it’s legal lending limit. This extends the lending potential of the lender and enables them to offer more competitive rates and better loan terms to their customers.
  • The guaranteed loans help local lenders to meet their requirements under the Community Reinvestment Act (CRA).
Funds may be used for the following business and industrial purposes:
  • Business and industrial acquisitions.
  • Construction, conversion, enlargement, repair and modernization of facilities.
  • Purchase of land, buildings, machinery and equipment.
  • For start-up and working capital (inventory and accounts receivable funding),
  • Processing and marketing facilities.
  • In certain cases, for refinancing existing debts.
  • Certain housing development sites.
  • Pollution control.
  • Feasibility studies; interest, including interim financing before the first principal payment becomes due or the project starts producing income; lenders fees and charges; fees for preparing an application.
Loans may be made for up to 30 years on land, buildings, and permanent fixtures; up to 15 years on machinery and equipment (depending the useful life of the equipment); and up to 7 years for working capital.
The interest rates are determined by the lender and may be fixed or variable, However, variable rates can be changed no more than quarterly, and no floor or ceiling is permitted.

The lender’s customer must have enough equity to provide reasonable assurance that the project will be successful. A minimum of 10 percent tangible balance sheet equity is required. Balance sheet equity of at least 20 to 25 percent is required for new businesses, businesses without full personal or corporate guarantees, and energy related businesses.