ABOUT THE ARKANSAS SMALL BUSINESS GUARANTY PROGRAM
Provides a source of capital to Arkansas small business enterprises.
Qualifying small businesses perform governmental and/or private contract work, including service contracts.
- ADFA provides a loan guarantee to lenders up to 80% of the first $200,000 loan amount with maximum loan guarantee of $160,000.
- Lenders then provide capital through loans to small businesses to adequately finance their working capital needs.
Cost of the guarantee is 1% per 180 day maturity with another 1% due if optional renewal is exercised, for a maximum of 2%.
An ADFA loan guarantee can be used in conjunction with other ADFA programs such as Capital Access.
ADVANTAGES TO YOUR BUSINESS
- Helps obtain financing for labor and materials necessary to complete specific governmental and/or private contracts.
- Builds your lender relationships.
- Small business with an opportunity to bid on a contract will contact a lender for a line of credit loan and determine the amount of working capital necessary to complete the contract.
- Once a contract is awarded, complete the required documentation for formal approval from the bank.
- After the bank approves the loan, the application will be forwarded to ADFA for its approval and issuance of the Loan Guarantee Agreement.
- Initial ADFA approvals will be issued by an ADFA Loan Committee, with ratification by the full Board at the subsequent meeting.
LOAN APPLICATION WILL INCLUDE
- Details of the project, contract history and work experience of contractor
- Applicant financial statements, credit information, loan repayment ability in the event of default
- Collateral availability and borrower’s personal guarantee
- Contractor’s ability or inability to secure conventional financing
- Values of contract in comparison to loan request