State, County, and Local Small Business Loan Financing

There are a variety of financing programs available to help your business grow. While the Small Business Administration (SBA) is the main resource for small business owners, it is not the only one. Each state has a Small Business Development Center (SBDC) to provide management assistance to current and prospective small business owners. If you are looking to start or expand a small business, contact your local SBDC to see if they can help you. In addition, be sure to read up on Minority Business Loan Programs.

SBDCs offer one-stop assistance to individuals and small businesses by providing a wide variety of information and guidance in central and easily accessible branch locations. The program is a cooperative effort of the private sector; the educational community; and federal, state, and local governments. Here are some of the loan programs your SBDC may offer:

504 loans are offered directly through approved local economic development agencies. The financing agency is limited to 40 percent of the project but not to exceed $1 million.

Community Adjustment & Investment Program (CAIP) loans are available to businesses at risk due to trade pattern changes in Canada and Mexico.

Microloans are great for borrowers seeking smaller loan amounts. Microloans are offered directly through approved local economic development agencies, and are available for amounts up to $25,000. The downside to these loans is that the interest rates generally are much higher than SBA-guaranteed loans.

Industrial Development Revenue Bond programs (IDRB) are for financing business and industrial expansions for firms with strong credit. Learn more about Cleaning Up Your Company's Credit Profile. IDRBs can provide low-interest loans for large projects. Bond proceeds can only be used to acquire land, building and equipment. Working capital and inventory are not eligible for this type of financing. These bonds are generally used when financing of $1 million and higher is required.

These bonds are issued by county or state agencies and purchased by private parties. The borrower is responsible for paying the principal, interest, and other costs of the bonds paid solely by the beneficiary company. In order to participate in this program, either as the borrower or bond purchaser, a company may not have participated as an owner or principal user in any tax-exempt financing totaling more than $40 million.

IDRBs may finance up to 100 percent of project costs, with loans up to $10 million for tax-exempt bonds, and no limit if the bond is taxable. Because of the cost of administrating these bonds, they are best for projects valued at $1 million or more. Interest rates on IDRBs may be fixed or variable, and maturities can range from five to 30 years.