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Small Business Loans
The Small Business Administation (SBA) offers numerous loan programs to assist small businesses. It is important to note, however, that the SBA is primarily a guarantor of loans made by private and other institutions.
Other sources for small business loans can be found in the list below:
Gap Financing
Direct loans usually provide only a portion (usually 30- 40%) of the total financing needed and are designed to meet fixed asset needs. Most public sector direct loans provide "gap" financing. "Gap" financing fills the void between the total cost of the project and the total amount of funds the borrower has available from other sources such as owner's cash and private bank loans. Community Development Block Grants and Revolving Loan Funds are examples of "gap" financing programs. These programs are often competitive and contain certain requirements, such as the creation of new jobs and benefit to low and moderate income persons.
MicroLoan Programs
The MicroLoan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, the Small Business Administation (SBA) makes funds available to nonprofit community based lenders (intermediaries), which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level. The organizations below have MicroLoan programs:
Revenue Bonds/Capital Improvement
The District of Columbia Revenue Bond Program provides below market interest rate loans to qualified private enterprises that are located in the Enterprise Zone as well as non-profit and manufacturing organizations citywide. Bonds can be issued to assist in financing a broad variety of capital projects, including commercial development, infrastructure improvements and equipment and machinery used in business and other endeavors such as the retail trades, health care, education, housing, recreation, and solid waste recycling. For more information please visit the Office of the Deputy Mayor for Planning and Economic Development's Revenue Bond Program webpage.
Tax Incremental Financing
Tax Increment Financing (TIF) involves the issuance and sale of tax-exempt governmental revenue bonds to finance public infrastructure redevelopment within one or more predetermined geographic areas on the basis of specific statutory eligibility criteria. To secure the repayment of TIF bonds, the government consents to segregate into a special account a portion (e.g., 25 percent, 50 percent) of the incremental growth in real property tax collections occurring within the area from a specific date. Sales tax increments may be applied to shorten the repayment period, or to provide credit enhancement. For more information please visit the Office of the Deputy Mayor for Planning and Economic Development's Tax Increment Financing webpage.
Venture Capital
Venture Capital firms (VCs) generally require some management control (in addition to repayment) in exchange for their financial investment. An advantage to that is that they may also bring expertise and experience that your business does not currently have.
To obtain a listing of area VCs, you may visit the web site of the Mid-Atlantic Venture Association (MAVA) and choose "member profiles," which allows you to search for venture companies that fit your criteria of industries and/or locations. MAVA can also be reached at (410) 560-5855.
Grants and Rebates
Below is a list of resources that offer grants or can help you find grants that you may apply for.
Lending Institutions
The DC Department of Insurance, Securities and Banking (DISB) has two missions: to provide fair, efficient, and fast regulatory supervision of insurance and securities businesses and banking and financial institutions for the protection of the citizens of the District of Columbia; and to create conditions that will retain and attract national and international financial services businesses to the District. To view a list of banks located in DC please click here.
Other Funding Sources
For information on other possible sources of funding please vist Other Sources of Funding section under Starting a Business.
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