The Washington State Department of Commerce (DOC) recently launched two of five new programs designed to increase the flow of capital to underserved communities across the state that have been otherwise left out of traditional banking opportunities.

A total of $163 million in funding for the programs comes from the U.S. Treasury’s State Small Business Credit Initiative (SSBCI).

“Access to capital is one of the major challenges for small businesses, particularly those in historically underserved and underrepresented communities,” Washington State Department of Commerce Director Mike Fong said in a press statement. “These innovative loan programs will help fill this funding gap and have a multiplier effect that benefits local economies across the state.”

Two programs kicked off in May

Applications are now open for the following loan programs:

• • Small Business Flex Fund 2 Program: $63 million. The flex fund program works with participating Community Development Financial Institutions (CDFIs) to address the capital needs of the smallest businesses and nonprofit organizations across the state. The program purchases a portion of the loans from CDFIs to free up existing capital to allow CDFIs to generate additional loans for small businesses.
  • Owner-Occupied Commercial Real Estate Loan Program: $25 million. Targeted at socially and economically disadvantaged business owners and very small businesses, funds from this program can be used for tenant improvements, construction, and the purchase or refinance of qualifying properties. Borrowers apply for the programthrough a subsidiary of Heritage Bank and a certified Community Development Entity.

Two additional SSBCI programs are expected to launch this summer:

• • Collateral Support Program (CSP): $10 million. The CSP is designed to assist small businesses that are having trouble qualifying for financing due to a collateral shortfall in their 504 bridge loan. Funds are dedicated to short-term construction loans.
  • Revenue Based Financing Fund (RBF): $12 million. The RBF will offer upfront capital with repayment of loans based on a percentage of a business’s earnings.

Technical assistance experts needed

The final program is still under development. The SSBCI Technical Assistance program ($2 million) will offer technical assistance to socially and economically disadvantaged business owners and very small businesses to prepare them to apply for loans or investment opportunities through the SSCBI program.

Commerce is soliciting proposals from those qualified to offer statewide technical assistance in legal, accounting, and financial advisory services. Click here for the Request for Proposals. The deadline to submit proposals is June 23.

For more information, including FAQs, visit the DOC website or contact Linda Womack at SSBCI@Commerce.wa.gov.