Accessing Capital: Small Businesses and Entrepreneurs Have Options -
Ask any business owner today to name the two biggest challenges they face and most will tell you extended job vacancies/growing skills gap and access to capital. Addressing both challenges is key to success but without capital entrepreneurs can’t generate jobs, expand operations and grow their enterprises. Most businesses rely on their bank for traditional lines of credit and equipment loans but oftentimes that’s not enough. Even well established businesses sometimes fall short of meeting the credit criteria of the bank to qualify for a loan. There are programs available, SBA loans, most often come to mind, and they are certainly one solution. Another program, less well known, is the Advantage Illinois Participation Loan Program.
In conjunction with the Small Business Jobs Act of 2010, the Illinois Department of Commerce & Economic Opportunity (DECO) created the Advantage Illinois Participation Loan Program (Advantage Illinois). The program is federally funded through the Small Business Credit Initiative. The program has created over 400 jobs and $78million dollars plus has been lent to Illinois businesses.
Working with participating lenders across the State, Advantage Illinois gives entrepreneurs an avenue to access capital. One such participating lender in the program is Schaumburg Bank & Trust Company N.A., a Wintrust community bank. The Bank, alongside the State and the business owner structure a credit that works for all parties. The Bank is the primary lender and the State participates by purchasing up to 50% of the loan amount thus reducing the Bank’s credit exposure and strengthening the overall credit quality of the loan. A win, win.
Eligible companies with less than 750 employees looking to finance equipment, owner occupied real estate, working capital, inventory, A/R or leasehold improvements should inquire about the Advantage Illinois program. One of the key requirements of the program is for every $50,000 participated one new job must be created within two years of funding the loan. The application process is simple, the maximum term is 10 years and the Advantage Illinois loan rate is 2% below the Bank’s rate.
The ideal candidate for an Advantage Illinois Participation Loan Program is a well-established business with strong cash flow whose credit request carries with it a collateral shortfall. A recent example: the Bank partnered with Advantage Illinois to provide credit to a local manufacturing company working to expand its business and needing to purchase equipment. The company wanted 100% financing on the equipment purchase but the equipment appraisal came in with a value lower than expected. With Advantage Illinois purchasing a 50% loan participation in the new equipment loan with the Bank, a lower blended interest rate and 100% financing the company was able to achieve their expansion goal.
Another excellent candidate for utilizing Advantage Illinois in partnership with the Bank are companies looking to refinance SBA 7A loans that have been outstanding for at least two years or more. There may be opportunity to lower the overall interest rate.
The Advantage Illinois Participation Loan Program promotes business expansion, job creation and helps to keep businesses in Illinois. If you are looking to grow your business or refinance existing debt you should seek a banking partner with a large toolbox of options and one who thinks outside of the box.