Financing Opportunities

The SDC Revolving Loan Fund was established in 2002 with a $118,600 grant
from the USDA Rural Development program. This fund has seen eleven borrowers start,
expand, or enhance their businesses and has generated year round and seasonal job
opportunities that would otherwise have gone unrealized. The total amount of funds
leveraged now total $200,000.

These funds are available to all Skagway based microenterprises, preferably, year round
business ventures. Businesses not eligible for commercial loans will be given preference.
As with any loan from a commercial lending agency these loans require a 100% collateral
deposit from the borrower. The RLF requires applicants to supply up to 25% cash/equity
contributed to the total cost of the project.

Application forms can be picked up at the SDC office (344 7th Ave) during regular office
hours, or arrange for an appointment to discuss your project requirements and the
services that SDC can offer.

What Lenders are Looking For
Anybody who lends money always considers (to a various degree) 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.

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.

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.

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 Margaret O'Neal 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
www.commerce.state.ak.us/investments/sbed.cfml
Phone: Toll Free 1-800-478-5626 within Alaska