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Small Business Programs

Small Business Loan & Guaranty Program

Small Business Loan and Guaranty Program

The Small Business Loan and Guaranty Program facilitates capital accessibility for small businesses by providing loan guarantees to banks and other small business lenders in association with the federal State Small Business Credit Initiative (SSBCI). The program's purpose is to provide financial assistance, which will help with the development, expansion and retention of Louisiana's small businesses. The program is administered by Louisiana Economic Development through Louisiana Economic Development Corporation (LEDC).

  • Guarantees may range up to 75% of the loan amount, not to exceed $1.5 million.
  • Guarantee fee may be waived (determined by risk).

Loan Amount: $5,000 to $1.5 million
Maximum Guarantee: 75%
Minimum Equity Requirement: 15% to 20%
Application Fee: $0
Quick Turnaround for Loans: $350,000 or less

 
  • Must be a Louisiana small business (as defined by the Small Business Administration)
  • Must be domiciled in Louisiana
  • Owners or principal stockholders shall be Louisiana residents
  • For loans of $100,000 or less, there must be one new permanent job or one retained job
  • For loans over $100,000, there must be two new permanent jobs created

Program Rules: 

All incentive program rules are in the Louisiana Administrative Code maintained by the Office of the State Register.

Submit your completed business plan or project proposal to a Louisiana bank and establish a relationship with a lending officer. A completed application form must be submitted to LEDC by the bank or other commercial lending entity seeking the loan guaranty.

For more information on the Small Business Loan and Guaranty Program, contact:

Seth Brown
Program Administrator, Loan and Investment Programs
seth.brown@la.gov
225.342.5254

Susan Bigner
Program Administrator, Loan and Investment Programs
susan.bigner@la.gov
225.342.5651

Christian Pennington
Program Administrator, Loan and Investment Programs
christian.pennington@la.gov
225.342.5883

After you have completed a business plan or a loan proposal, you are ready to start your business or expansion project and proceed as follows:

  • The borrower must first contact a local commercial lending institution to discuss their lending needs, preferably an entity that is willing to entertain such a loan with the prospect of a guaranty. (Note: The financial institution will be responsible for determining the eligibility of each potential borrower.)
  • The lending institution will then contact LEDC for qualification and submit a complete application, analysis, proposed structure and commitment. (Note: The commitment can be contingent upon an LEDC guaranty.)
  • The LEDC staff will evaluate the loan application, review the bank's credit analysis and then make recommendations to the appropriate LEDC approval body.
  • The lending institution and applicant will be notified of the loan guaranty decision after review of the application packet by the appropriate LEDC committee/board.
  • LEDC's legal counsel will prepare a guaranty agreement outlining the conditions and covenants upon which the loan guaranty has been approved.

Q: My business is a startup. Can my bank obtain a guaranty for the loan I'm applying for?
A: Your business must meet the following criteria to be eligible for guarantee:

  • Must be a Louisiana small business as defined by the Small Business Administration (SBA).
  • Must be domiciled in Louisiana.
  • Owners or principal stockholders shall be Louisiana residents.
  • For loans of $100,000 or less, there must be one new permanent job or one retained job.
  • For loans over $100,000, there must be two new permanent jobs created.
  • A borrower must have 20% of the loan amount for a startup operation or acquisition and no less than 15% for an expansion.
  • Equity is defined as:
  • Cash
  • Paid-in capital
  • Paid-in surplus and retained earnings
  • Partnership capital and retained earnings

Q: My sales revenue was $2.5million dollars last year. Does my business meet LEDC's definition of a small business?
A: LEDC uses the SBA definition and criteria to determine if a business is considered a small business. SBA defines a small business as one that is independently owned and operated, is organized for profit and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding 12 months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

  • Manufacturing: Maximum number of employees may range from 500 to 1,500, depending on the type of product manufactured.
  • Wholesaling: Maximum number of employees may range from 100 to 500, depending on the particular product being provided.
  • Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided.
  • Retailing: Annual receipts may not exceed $5 to $21 million, depending on the particular product being provided.
  • General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction.
  • Special Trade Construction: Annual receipts may not exceed $7 million.
  • Agriculture: Annual receipts may not exceed $0.5 to $9 million, depending on the agricultural product.

Q: Who is eligible to apply for the program?
A:Small businesses domiciled in Louisiana (see the Small Business Administration's definition of a small business).

Q: Does the borrower have to create new jobs with a startup, expanding or acquisition business?
A:The business must either create or retain one job for loans under $100,000 or two jobs for loans above that amount.

Q: Does the borrower initially contact the bank or lending institution to apply for a guarantee?
A:The borrower is required to contact the bank or lending institution directly to apply. The lender then works directly with LEDC.

Q: Are there any program fees?
A:There's no application fee. The guaranty fee may be waived (determined by risk).

Q: How long does the process take?
A:It takes anywhere from one to three weeks to process a guaranty. The specific length of time is determined by the approving body that is required for the guaranty. Loans for $350,000 or less will have a quicker turnaround.

Q: Is there a maximum loan amount?
A:There is no maximum loan amount. However, maximum guarantee amount is $1.5 million dollars.

Q:What types of financing are eligible in the Small Business Loan and Guaranty Program?

  • Revolving Lines of Credit
  • Startups
  • Acquisitions
  • Fixed assets purchases
  • Purchase or construction of building (limited to 51% applicant occupancy)

Q: What types of businesses are not eligible in the Small Business Loan and Guaranty Program?
A:

  • Restaurants (regional or national franchises will be considered)
  • Bars and saloons
  • Gaming businesses
  • Real estate speculations
  • Recreational, theme or amusement parks
  • Parks or camping facilities

Q: How much equity does a business need to be eligible for a LEDC Guarantee?
A: The minimum equity requirement for a startup business or business acquisition is 20%. Existing businesses must have a 15% equity injection. Equity is defined as:

  • Cash
  • Paid-in capital
  • Paid-in surplus and retained earnings
  • Partnership capital and retained earnings

Q: Who determines if a small business owner gets approved for a loan?
A: This program is administered by Louisiana Economic Development through the Louisiana Economic Development Corporation, which will make decisions as to the approval of the loan guaranty. However, the bank or lending institution makes all decisions relevant to the approval of the loan.

Program Contact

Seth Brown

Program Administrator, Loan and Investment Programs
seth.brown@la.gov
225.342.5254

Susan Bigner

Program Administrator, Loan and Investment Programs
susan.bigner@la.gov
225.342.5651

Christian Pennington

Program Administrator, Loan and Investment Programs
christian.pennington@la.gov
225.342.5883

The Process

    • Complete a comprehensive business plan. Contact the nearest Louisiana Small Business Development Center (SBDC) for assistance in developing a business plan. Find a local SBDC online.
    • Submit a copy of the completed business plan to a Louisiana bank or other commercial lending entity.
    • A completed application form must be submitted to LEDC by the bank or other commercial lending entity seeking the loan guaranty.
    • The LEDC staff evaluates the loan application, reviews the bank's credit analysis and makes recommendations to the appropriate LEDC approval body.
    • After review of the application packet by the appropriate committee/board, the bank and applicant are notified of the loan guaranty decision.
Apply Now >

Note: Existing businesses can submit a loan proposal or a summary explaining the specifics of the proposed project in lieu of a business plan. Projections justifying an expansion project may be required.

 

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