Government Funding is one of the many ways cooperatives can get funding. There are many government funding options. Most relevantly of which is the Small Business Administration (SBA) Loan and the California Small Business Loan Guarantee.
Small Business Administration (SBA) Loan
The SBA Loan offers a program called the CDC/504 Loan Program. CDC stands for Certified Development Company which is a private, nonprofit corporation that is set up to contribute to economic development within its community. CDCs work with SBA and private sector lenders to provide financing to small businesses, which accomplishes the goal of community economic development.
The loan must be used for fixed-asset projects such as:
- The purchase of land, including existing buildings
- The purchase of improvements, including grading, street improvements, utilities, parking lots, and landscaping
- The construction of new facilities or modernizing, renovating, or converting existing facilities
- The purchase of long-term machinery and equipment
The loan cannot be used for:
- Working capital or inventory
- Consolidating or repaying debt
- Refinancing
The California Small Business Loan Guarantee
The California Small Business Loan Guarantee is another option for government funding. It allows a business to not only acquire a loan it could not otherwise obtain but to establish a favorable credit history with a lender so that the business may obtain future financing on its own.
Eligible Applicants:
- Any small business as defined by the SBA (typically businesses that employ 100 people or less).
The loan can be used for:
- Purchases land primarily in California
- Any standard business purpose beneficial to the applicant’s business, such as expansion into new facilities or purchase of new equipment.
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