Loan and Credit Guarantee Fund
Helping Businesses Access Financial Resources
The Iowa Loan and Credit Guarantee Fund, a program of the Iowa Department of Economic Development (IDED), was created to assist businesses access the financing they need to grow. This program provides lenders with additional security, encouraging greater lender activity to businesses and promoting economic development across the state.
Eligible applicants must employ less than 200 full time employees and sell goods and services in markets where national and international competition exists. In addition, the applicant must do business in one of IDED's targeted areas — biosciences, advanced manufacturing and information solutions/financial services, value-added agriculture, or microenterprise. A microenterprise is a business providing services with five or fewer full-time equivalent employee positions, and located in a municipality with a population under fifty thousand that is not contiguous to a municipality with a population of fifty thousand or more.
Iowa Loan and Credit Guarantee assistance may be used for most business activities, such as the purchase of new equipment and machinery, working capital for operations and export transactions, research and development, marketing and other costs the department may designate.
Businesses have two ways to access the Loan and Credit Guarantee Fund:
- A qualified business or targeted industry business can initiate the process. An application is made directly to IDED for a preliminary guarantee commitment which may be issued subject to the business securing a commitment for financing from a financial institution. The application procedures specify the process by which a financial institution may obtain a final loan and credit guarantee. This process is subject to a $1,000 application fee in addition to all other applicable program fees, which are described below.
- Eligible businesses can apply to their lender for conventional financing and the lender can then submit an application to IDED. The Loan and Credit Guarantee Board of Directors will consider an application once it is submitted by the lender and accompanied by supporting documentation. Once the application is thoroughly reviewed, a written notice of approval or denial will be sent to the lender within 10 business days.
Program fees:
- Applications submitted by a qualified business or targeted industry business requesting preliminary approval the fee is $1,000.00. Applications submitted by a qualified financial institution the fee is $500.00.
- Upon approval of a loan and credit guarantee application, the department shall charge a fee for authorization of the loan or credit guarantee. The fee shall be 2.5 percent of the amount of funds to be guaranteed under the program.
- For a line of credit, the authorization fee shall be one half percent (1/2%) per year renewable annually for a period not to exceed five (5) years. The guarantee will automatically expire if the fees are not submitted upon renewal of the line of credit.
Businesses approved for assistance will be notified by a Loan and Credit Guarantee Agreement, which must be signed by IDED and the lender, along with all applicable fees and charges paid, in order to take effect. In agreeing to guarantee a business loan, the IDED assumes responsibility for up to 50 percent of a loan made by a lender should the business default or be unable make scheduled payments.
Access the Financial Assistance Application Process.
To Learn how the Iowa Loan and Credit Guarantee Fund can help you get the financial backing you need, contact:
Phone: 515.242.4896 or 800.245.4692
E-mail: business@iowalifechanging.com
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