Project Qualifications

Federal Department of Housing and Urban Development (HUD) Section 108 Loan Guarantees are available to businesses from the Washington State Department of Commerce (Commerce) through cities and counties which are eligible to receive Washington State Small Cities Community Development Block Grant (CDBG) Program assistance (see map below).

An eligible city or county may apply to obtain a 108 Loan Guarantee for a private business projects which meets the following conditions:

• The need for assistance is appropriate given the type of the project.
• The project will create jobs, and if qualified lower-income candidates are available, the majority of the jobs must be made available to them. Retention of jobs can also be considered as a qualifying factor.
• The proposed repayment is 20 years or less.
• Other reasonable financing alternatives have been exhausted.
• The request is not less than $1 million nor does it exceed $7 million.
• The sponsoring jurisdiction has less than $7 million in outstanding 108 Loan Guaranties. Maximum lending amount will be no more than $35,000 per job created/retained.

Terms of the Guarantee

• Borrowers may be required to establish a reserve account of up to 10 percent of the loan amount.
• Borrowers will typically be charged an interest rate of the cost of borrowing plus a one-time commitment fee of up to 1.5% of the loan amount.
• Borrowers must pledge collateral equal to at least 100 percent of the loan amount and may be required by HUD to provide additional collateral for loans with a term of ten years or more.

Approval Process

• Borrowers must have an eligible local government sponsor willing to support the project and fulfill local government requirements.
• CTED must approve the project and pledge future CDBG dollars to secure bond holder payments.
• HUD must approve the project and fund the project.

Updated June 2009