Virginia Small Business Financing Authority (VSBFA)

The Virginia Small Business Financing Authority (VSBFA) is the Commonwealth of Virginia’s business and economic development financing arm. VSBFA provides businesses and localities with debt financing resources for economic development projects and other small business and entrepreneurial financing needs. VSBFA’s definition of “small business” is $10 million or less in annual revenues over each of the last three years, or a gross net worth less than $2 million; or 250 employees or fewer in Virginia; or qualification as a 501(c)(3) nonprofit entity. For more information, please refer directly to VSBFA . Contact Ray Sanchez Virginia Small Business Financing Authority 804.371.8228 ray.sanchez sbsd.virginia.gov Eligibility and Program Overviews Private Activity Bonds (PABs) VSBFA issues tax-exempt and taxable bonds to provide qualifying businesses and 501(c)(3) entities with access to long-term, fixed-asset financing at favorable interest rates and terms. Industrial Development Bonds (IBDs) can fund land acquisition, building construction, and capital asset (equipment) purchases. Eligible borrowers include new or expanding manufacturing companies, “exempt” facilities such as solid waste disposal facilities, and 501(c)(3) entities. Through IDBs, creditworthy manufacturers and 501(c)(3) entities can borrow up to 100% of the cost of equipping a facility, including site preparation. IDBs may also facilitate tax-exempt funding for leased manufacturing facilities and equipment. All projects financed with IDBs must meet the federal tax code’s eligibility requirements. The maximum manufacturing project size is $20 million; 501(c)(3) entities and exempt facility projects are not subject to this dollar limitation. At current interest rates, unless a bank will be directly providing the financing, projects under $3 million are generally not cost-effective due to the transaction costs of bond financing. Economic Development Loan Fund (EDLF) The EDLF offers permanent working capital, owner-occupied commercial real estate, and equipment loans to fill the financing gap between private debt financing and private equity. Project eligibility is determined by guidelines set by the federal Economic Development Administration (EDA) and the VSBFA. Eligible borrowers include local industrial or economic development authorities and businesses engaged in energy, government contracting, and those businesses or entities that provide an enhanced “quality of life” in a locality or region. Eligible projects must provide economic benefit to the community through job creation/retention (minimum $10.00 hourly wage) or by enhancing a locality’s ability to attract private capital investment. The maximum loan amount is generally the lesser of 40% of the total project cost or $1,000,000, whichever is less. Generally, loans have 10-year maturities with amortizations based on the life of the asset and the borrower’s ability to repay. Rates are risk-based but can be below market. Loans are secured by assets and require personal guaranties. Loan Guaranty Program (LGP) The LGP helps Virginia’s businesses obtain funds to start or expand operations in Virginia. The program reduces a bank’s commercial loan risk in order to increase the availability of commercial loans to Virginia’s businesses. The maximum guaranty is the lesser of 75% of the credit amount or $1,000,000, whichever is less. The guaranty term cannot exceed seven years for term loans. Guaranties for lines of credit are available on an annual basis with a maximum of four subsequent renewals. Eligible borrowers must be a VSBFA-defined small business and meet VSBFA credit standards. Loan purposes include lines of credit for accounts receivable and inventory, term loans for permanent working capital or fixed asset purchases. Cash Collateral Program (CCP)

Eligibility and Program Overviews Private Activity Bonds (PABs)