OTHER BUSINESS FINANCING OPTIONS AVAILABLE
Trego County has other business financing options available beside our incentive packages. The following are other financing options available:
Pioneer County Development, Inc. - This is a Certified Development Company, certified by the Small Business Administration to package, close, and service SBA 504 loans. The 504 loans are just one of the many financing options for new and/or expanding businesses in Northwest Kansas. In addition to doing loan applications, PCDI works closely with the Kansas Department of Commerce in obtaining Kansas Industrial Training and Retraining grants for business in need of training employees. New and expanding businesses are encouraged to fully utilize the Kansas Enterprise Zone tax credits. These include sales tax exemption on many construction materials and job tax credits based on employment criteria. These tax credits may be applied against your Kansas income tax. Financing options they can help with include:
SBA 504 Loans- used for financing fixed assets, including real estate, buildings, machinery and equipment with a life of 10 years or more. The typical loan structure is for the bank to lend 50% of the project cost, SBA Debentures financing 35-40% and Small Business Concern investing 10-15%. The advantage to the small business is a low fixed rate of interest over a 10-20 year period with SBA finances and debentures. The bank's advantage is financing only 50% of the project, taking a first mortgage and first lien position on all collateral. This reduces their financial risk. The 504 loan is designed for total project cost of $100,000 or more.
Example:
- Total real estate and building cost is $500,000
- Bank Loan $250,000 (first mortgage in that amount)
- SBA Debenture $200,000 (second mortgage behind the bank)
- Small Business Concern $50,000
SBA 7(a) loans are used for a variety of projects including business furniture and fixtures, equipment, inventory and working capital. They may also be used in combination with the 504 loan. The 7(a) loans are made by the bank and partially guaranteed by the Small Business Administration. The guarantee to the bank usually ranges from 70-80%. This percentage applies to the current loan balance until it is paid off, using a given amortization schedule.
Example:
- Total business loan for inventory and equipment of $200,000.
- Bank loan for $200,000 (SBA guarantees $160,000 and the banks risk is $40,000. If collateral is liquidated, proceeds are split on a percentage basis).
7a SBA Express loans are used for businesses that qualify as small under SBA size standard criteria. Loans can not be made to businesses involved in speculation or investment. Collateral will not be required for loans of $25,000 or less. Lenders will be allowed to use their own established collateral policy for loans over $25,000. The maximum loan amount is $350,000 with a 50% guaranty. This loan provides the same use of proceeds as the regular 7(a) guaranteed program. SBA delegates the loan approval decisiona nd additional servicing and liguidation responsibilities to the Express Lenders. The bank uses their own documentation and procedures to reduce costs and expedite the process. Express loans can revolve with a maximum maturity of 7 years.
Other SBA programs include: The Low Interest Disaster Loan & Economic Injury Loan, Women's Prequalification Loan, and an Export Loan. Other business financing options include:
Community Development Block Grants - These are low interest loans to businesses with the possibility of interest-only payments for the first 18 months. One job must be created for every $35,000. Matching funds are required.
Business and Industry Loans through Rural Development - This program is much the same as the SBA 7(a) loan program, except the loan limit is much higher at $10 million.
Northwest Kansas Revolving Loan Fund - This is a fairly flexible program and is mainly used to help leverage other loan funds and fil a financing gap.
Industrial Revenue Bonds - Geared toward the larger manufacturers with interest rates varying according to the financial strength of the business. Certain tax credits are possible with IRB financing.
For further information about these programs contact:
Pioneer Country Development, Inc
PO Box 248
Hill City, KS 67642
(785)421-2151
nwkpdc@ruraltel.net
or
Charlene Neish, Director
Trego County Economic Development
PO Box 355, 216 Main
WaKeeney, KS 67672
(785)743-5785
tregocoed@ruraltel.net
or visit the SBA web site at www.sba.gov
OTHER BUSINESS FINANCING OPTIONS AVAILABLE
Trego County has other business financing options available beside our incentive packages. The following are other financing options available:
Pioneer County Development, Inc. - This is a Certified Development Company, certified by the Small Business Administration to package, close, and service SBA 504 loans. The 504 loans are just one of the many financing options for new and/or expanding businesses in Northwest Kansas. In addition to doing loan applications, PCDI works closely with the Kansas Department of Commerce in obtaining Kansas Industrial Training and Retraining grants for business in need of training employees. New and expanding businesses are encouraged to fully utilize the Kansas Enterprise Zone tax credits. These include sales tax exemption on many construction materials and job tax credits based on employment criteria. These tax credits may be applied against your Kansas income tax. Financing options they can help with include:
SBA 504 Loans- used for financing fixed assets, including real estate, buildings, machinery and equipment with a life of 10 years or more. The typical loan structure is for the bank to lend 50% of the project cost, SBA Debentures financing 35-40% and Small Business Concern investing 10-15%. The advantage to the small business is a low fixed rate of interest over a 10-20 year period with SBA finances and debentures. The bank's advantage is financing only 50% of the project, taking a first mortgage and first lien position on all collateral. This reduces their financial risk. The 504 loan is designed for total project cost of $100,000 or more.
Example:
- Total real estate and building cost is $500,000
- Bank Loan $250,000 (first mortgage in that amount)
- SBA Debenture $200,000 (second mortgage behind the bank)
- Small Business Concern $50,000
SBA 7(a) loans are used for a variety of projects including business furniture and fixtures, equipment, inventory and working capital. They may also be used in combination with the 504 loan. The 7(a) loans are made by the bank and partially guaranteed by the Small Business Administration. The guarantee to the bank usually ranges from 70-80%. This percentage applies to the current loan balance until it is paid off, using a given amortization schedule.
Example:
- Total business loan for inventory and equipment of $200,000.
- Bank loan for $200,000 (SBA guarantees $160,000 and the banks risk is $40,000. If collateral is liquidated, proceeds are split on a percentage basis).
7a SBA Express loans are used for businesses that qualify as small under SBA size standard criteria. Loans can not be made to businesses involved in speculation or investment. Collateral will not be required for loans of $25,000 or less. Lenders will be allowed to use their own established collateral policy for loans over $25,000. The maximum loan amount is $350,000 with a 50% guaranty. This loan provides the same use of proceeds as the regular 7(a) guaranteed program. SBA delegates the loan approval decisiona nd additional servicing and liguidation responsibilities to the Express Lenders. The bank uses their own documentation and procedures to reduce costs and expedite the process. Express loans can revolve with a maximum maturity of 7 years.
Other SBA programs include: The Low Interest Disaster Loan & Economic Injury Loan, Women's Prequalification Loan, and an Export Loan. Other business financing options include:
Community Development Block Grants - These are low interest loans to businesses with the possibility of interest-only payments for the first 18 months. One job must be created for every $35,000. Matching funds are required.
Business and Industry Loans through Rural Development - This program is much the same as the SBA 7(a) loan program, except the loan limit is much higher at $10 million.
Northwest Kansas Revolving Loan Fund - This is a fairly flexible program and is mainly used to help leverage other loan funds and fil a financing gap.
Industrial Revenue Bonds - Geared toward the larger manufacturers with interest rates varying according to the financial strength of the business. Certain tax credits are possible with IRB financing.
For further information about these programs contact:
Pioneer Country Development, Inc
PO Box 248
Hill City, KS 67642
(785)421-2151
nwkpdc@ruraltel.net
or
Charlene Neish, Director
Trego County Economic Development
PO Box 355, 216 Main
WaKeeney, KS 67672
(785)743-5785
tregocoed@ruraltel.net
or visit the SBA web site at www.sba.gov