There are several non-traditional or commercial business financing opportunities in
Skagway and Southeast Alaska. All of these different programs focus on varying sectors
and loan conditions. When reviewing these programs make sure that you read all of the
details and try to find the program that most fits your business and financing needs.
In general these financial services include short term and long term loans with varying repayment schedules. Loan fees are charged and vary depending on the size of the loan and the type of financing applicable. Business loans are available for purposes such as buying or expanding/enhancing a business, starting a new business, equipment, and working capital.
In order to be eligible for a loan, you must submit a plan detailing all aspects of your proposed business. If you need help with your loan application, SDC can provide you with guidance through the planning and preparation stages. You may be required to submit a completed business plan along with your loan application, we can review it based on the following criteria:
• The financial viability of your proposed business or expansion.
• The amount of equity that you are able to contribute.
• Your credit history.
• The impact your business will have on the environment.
• The employment generated by your business.
• The value and type of security which you have.
• The effect that your business will have on competition.
The SDC Revolving Loan Fund was established in 2002 with a $118,600 grant from the USDA Rural Development program. This fund saw eleven borrowers start, expand, or enhance their businesses and generated year round and seasonal job opportunities that would otherwise have gone unrealized. The total amount of funds leveraged totaled $200,000.
These funds were available to all Skagway based microenterprises, preferably, year round business ventures. Businesses not eligible for commercial loans were given preference. As with any loan from a commercial lending agency these loans required a 100% collateral deposit from the borrower. The RLF required applicants to supply up to 25% cash/equity contributed to the total cost of the project.
The current SDC RLF is closed. Updates about future SDC RLF opportunities will be added and/or advertised.
Once you are successful in obtaining a loan, we can support you with business
workshops, individualized training sessions, and additional financial assistance, and a
wide range of office services and equipment. Financing Opportunities
Southeast Alaska Revolving Loan Fund was established to help business
owners create and retain quality jobs in Southeast Alaska. The RLF makes direct loans
to new and expanding businesses that cannot qualify for traditional bank financing. Loans
range in size from $5,000 to $300,000. Maximum loan amount determined in part by the
number of jobs created or saved.
Primary criteria for consideration are dedicated and experienced management, past performance, economic viability of the business, and clear competitive advantages. All must have completed and current business plan. Financing is for most business needs including debt refinancing, purchase of fixed assets, permanent working capital, construction and leasehold improvements.
Contact: Brian Holst firstname.lastname@example.org www.jedc.org/rlf.htm
Phone: 888-393-3662 US Small Business Administration assists people to enter and remain in business by providing loans and loan guarantees, management counseling and training, and assistance in obtaining government procurement contracts. Its loan guarantees are administered primarily through partnerships between SBA and banks or private entities. For guaranty loans the borrower initiates the loan request to a local lender, who applies to SBA for its guaranty. SBA may guaranty up to 85% of loans up to $150,000 or up to 75% of loans up to $2 million.
Eligible projects are business real estate, inventory purchases, machinery and equipment, leasehold improvements, and working capital. Applicants must meet SBA size standards and credit criteria are much the same as used by banks. The SBA has several other specialized loan options contact them to enquire about all of their loan programs.
Contact Amy Lea www.sba.gov/ak
Phone: 907-586-8714 Small Business Economic Development Loan goal is to provide private sector employment by financing the start-up and expansion of businesses that will create significant long-term employment. Companies must be a small business as defined by the Small Business Administration. Applicants are required to match loan funds with cash or other private, non-public financing. In many cases this private match must be twice the loan amount requested. Loans may not be made if a bank is willing to finance the entire project. Loans must result in the creation or retention of jobs that would be lost in eligible areas.
Maximum loan amount is $300,000 and the interest rate is fixed rate generally below 6%. Maximum term of 20 years for fixed asset loans and 5 years for working capital loans. All loans must be adequately secured. The loan amount may not exceed 90% of the value of the collateral offered. All assets purchased with loan proceeds must be offered as collateral for the loan. Personal guarantees are required of all persons holding 20% or more ownership interest in the business receiving the loan.
Funding is limited and applicants are encouraged to call and discuss availability of funds prior to submitting a loan application. There are loan fees and closing costs.
Contact Division of Investments
Phone: Toll Free 1-800-478-5626 within Alaska Rural Development Initiative Fund goal is to provide private sector employment by financing the start-up and expansion of businesses that will create significant long-term employment. Loans may be made to a business located in a community with a population of 5,000 or less that is not connected by road or rail to Anchorage or Fairbanks, or with a population of 2,000 or less that is connected by road or rail to Anchorage or Fairbanks.
Loans may be made for working capital, equipment, construction or other commercial purposes. Loans must result in the creation of new jobs or the retention of existing jobs in the eligible community.
Maximum loan amount is $100,000 to a person or up to $200,000 to two or more people. Maximum loan term is 25 years and the interest rate is 1% below the prime rate; not less than six percent. All loans must be adequately secured. A loan may not exceed the value of the collateral used to secure the loan. A reasonable amount of money from other non-state sources must be committed for use on any project for which money from a loan will be used. There are loan fees and closing costs.
Contact: Division of Investments
Phone: Toll Free 1-800-478-5626 within Alaska Evergreen Community Development Association role is to help small businesses access long-term fixed asset financing with the private sector. Evergreen offers alternative commercial loan programs to stimulate economic development through small business finance.
The Evergreen Loans that are available include:
SBA 504 Loans: Financing for the purchase of owner-occupied commercial real estate and equipment for for-profit businesses in Alaska, Washington, and Oregon.
Community Reinvestment Fund Business Loans: Financing for the purchase of owner-occupied commercial real estate, equipment, and existing debt refinance for for-profit and non-profit businesses in Alaska, Washington, and Oregon.
Community Reinvestment Fund New Market Loans: Financing for the purchase of owner-occupied commercial real estate, equipment, and existing debt refinance for for-profit and non-profit in low income areas of Alaska, Washington, and Oregon.
What Lenders are Looking For
Anybody who lends money always considers (to varying degrees) the following factors:
1. Repayment Ability - What evidence exists to convince me I'm going to get paid back?
2. Management - What evidence exists that indicates that this person can manage his/her affairs well enough to allow the opportunity for payback?
3. Investment - What evidence exists that this person has enough of a commitment to the business so that I'll be sure he/she wants to work hard to protect it? (If they protect theirs, they will be protecting mine!)
4. Security - If all else (above) fails, what protection do I have to get my money back? What will it be worth when the business fails?
5. Equity - Most lending institutions will require at least 25 percent cash/equity contributed to the total capital cost of the project.
Remember it is quite unusual for all of the above factors to be completely satisfied. One or two points will most likely be stronger than the rest. Do not be discouraged if this is the case. Make sure that you focus on the strong points and are aware of the weak ones. All projects have them.