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.
What are Lenders 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?
What evidence exists that indicates that this person can manage his/her affairs well enough to allow the opportunity for payback?
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!)
If all else (above) fails, what protection do I have to get my money back? What will it be worth when the business fails?
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.
Regional and State Financing Opportunities
Path to Prosperity
Path to Prosperity is a sustainable business concept development competition for Southeast Alaska entrepreneurs. Introduced in 2013 by the Haa Aaní Community Development Fund, Inc. (HACDF) and The Nature Conservancy, this annual competition provides two winning entrepreneurs an award of up to $40,000 in seed funding for consulting/technical assistance to develop their business concept, along with support in finding investor funding. The competition aims to launch growth companies that will increase local employment, have a positive social and economic impact on their communities, promote sustainable use of local resources, and increase entrepreneurial know-how and business leadership in Southeast Alaska.
Southeast Alaska Revolving Loan Fund
The Juneau Economic Development Council’s Southeast Alaska Revolving Loan Fund (RLF) 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.
Small Business Economic Development Loan
The State of Alaska, Division of Economic Development offers this loan with the aim 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.
Alaska Rural Development Initiative Fund
The State of Alaska, Division of Economic development offers this loan with the aim 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.
US Small Business Administration
The Alaska district office of the US Small Business Administration (SBA) 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.
Alaska Evergreen Community Development Association’s
The role of the Alaska Evergreen Community Development Association 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.
Evergreen Loans that are currently available include:
SBA 504 Loans: The U.S. Small Business Administration established the 504 loan to help businesses purchase owner-occupied commercial real estate and equipment while retaining working capital. The SBA 504 loan puts financing within reach for small businesses through low down payments and long-term, low, fixed interest rates. It also reduces the risk to lenders through a shared financing structure.
Rural Loan Program: With the assistance of the United States Department of Agriculture, Evergreen provides non-agricultural businesses in rural communities with access to capital that otherwise might be difficult to obtain. The Rural Loan Program aims to alleviate poverty and boost employment by providing financing to to small businesses in communities with populations less than 25,000. It is available to most types of businesses.
Each loan program has its own criteria and lending requirements contact Evergreen for more information.
Phone: (907) 746-5047