Business Financing
For qualified borrowers, financing may include industrial development bonds, incentive grants, or small business programs.
Visit the Virginia Department of Small Business and Supplier Diversity (SBSD) or the Virginia Small Business Financing Authority (VSBFA) for more information on available programs, such as:
Commonwealth of Virginia FY 2020 Economic Development Assistance Program Grant
Virginia Small Business Financing Authority
101 North 14th Street, 11th Floor
Richmond, Virginia 23219
(804) 371-8254
Website
Economic Development Loan Fund (EDLF)
The Virginia EDLF offers permanent working capital, owner occupied commercial real estate, and equipment loans to fill the “gap” unmet by equity, conventional financing, and other sources (COF, Historic Tax Credits, etc.). Project eligibility is determined by guidelines set by the federal Economic Development Administration (EDA) and the VSBFA. Eligible borrowers include local Industrial or Economic Development Authorities and businesses engaged in technology, biotechnology, tourism, engine and vehicle manufacturers for the professional motor sports industry, basic industries, manufacturing, and those businesses or entities that provide for a locality’s economic and “quality of life” development. Businesses that derived 15 percent or more of their revenues from defense-dependent activities and can demonstrate economic hardship related to defense downsizing may also apply. Eligible projects must provide economic benefit to the community through job creation/retention (minimum $10.00 hourly wage) or by enhancing a locality’s ability to attract private capital investment. The maximum loan amount is generally the lesser of 40 percent of the total project cost or $500,000 unless the project is located in a city/county defined by the EDA as “economically distressed.” Loans in distressed areas can be higher – potentially in excess of $1 million depending on risk factors, the number of jobs created, and the region in which the project is located. Generally, loans have 10-year maturities with amortizations based on the life of the asset and the borrower’s ability to repay. Rates are risk-based but can be below market. Loans are secured by assets and require personal guaranties. Businesses apply directly to the VSBFA.
Loan Guaranty Program
The Loan Guaranty Program reduces bank commercial loan risk to increase the availability of small business loans. The maximum guaranty is the lesser of 75 percent of the credit amount or $750,000. The guaranty term is no longer than seven years. Eligible borrowers must be a VSBFA-defined small business and meet VSBFA credit standards. Loan purposes include lines of credit for accounts receivable and inventory and term loans for permanent working capital and fixed asset purchase. Businesses apply directly to the bank. Interested banks then contact the VSBFA if a guaranty is desired and the borrower creditworthy.
SWaM Loan Fund (SLF)
The SLF funds a maximum of $10,000 in loans to existing Virginia small businesses. Eligibility requirements are a minimum of two years of active operation in the Commonwealth and business owners/loan guarantors’ credit scores must be at least 650 each. Terms are a maximum of four years and rates are Wall Street Journal Prime plus three percent. If a business has received counseling from a Virginia Small Business Development Center, the maximum loan amount may increase to $25,000. Interested parties should apply directly to the VSBFA.
Virginia Capital Access Program (VCAP)
The VCAP promotes business credit by mitigating risk through a form of loan portfolio insurance for participating lenders. Businesses must meet the definition of a small business with credit approval performed by the bank. The lender notifies the borrower that the loan will be VCAP enrolled and sets the fee (two to seven percent of the enrolled amount). VSBFA matches the fee and the monies are used as special loan loss reserve accounts. Maximum enrolled amounts are $500,000 and maximum term is 10 years. Interested parties should apply to a participating bank.
Cash Collateral Program (CCP)
The CCP is designed to help Virginia's businesses obtain the funds to start, enhance, or expand their operations, and thereby create or maintain jobs in the Commonwealth. The VSBFA's participation helps reduce a lender's credit risk by providing cash collateral on deposit at the lender bank as support for a business purpose loan. Most typically, the CCP is used in those instances when the applicant company has demonstrated the ability to cash flow the debt, but the collateral coverage is insufficient for the lender's normal underwriting standards. It is also used for SBA 504 loans when the lending bank is funding the certified development company's loan pending the sale of a debenture. The VSBFA can provide cash collateral up to 40 percent of a loan or $500,000, whichever is less, with a maximum relationship participation between the borrower and the VSBFA of $500,000. The lender sets the interest rates and terms. The VSBFA's participation is for a maximum of five years on term loans. Annual lines of credit not matured may be renewed up to two times with a maximum term of three years. Interested parties should apply to a participating lender Small Business Investment Grant Fund (SBIGF). Virginia taxpayers that invest in Virginia businesses may qualify for cash grants of up to 10 percent of their investment amount. Qualified investments can be in the form of cash equity or subordinated debt. For investors to be eligible for the grant, they must invest in a business that has been certified as a qualifying small business by the Virginia Small Business Financing Authority. Investors must be certified as eligible also. Eligibility requirements are defined in the Code of Virginia, Chapter 16.1 of Title 2.2 §2.2-1616.
