Project Qualifications

Community Development Block Grant (CDBG) Float Loans 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 Program assistance.  An eligible city or county may apply for a grant under this program in order to extend a short-term loan to a private business entity under the following conditions:

• The business must demonstrate that public financing of the project is necessary and appropriate to create or retain jobs.
• The business must provide an unconditional, irrevocable Letter of Credit in U.S. dollars in the full amount of the principal and interest due, as collateral for the loan. The letter of credit must come from a financial institution with corporate headquarters in the United States.  The financial institution must be acceptable to the Department.
• The business must agree to create jobs and make the majority of them available to qualified lower-income candidates. Retention of jobs can also be considered as a qualifying factor.  The maximum that can be lent is $35,000 per job created/retained.
• The business must agree to enter into an agreement with Commerce and the local WorkSource Center to obtain referrals of qualified lower income job candidates for new non-managerial jobs to be created by the project.
• The business must agree to comply with all applicable federal, state, and local laws and regulations.

Principal and interest will be due at maturity or on demand, whichever occurs first. The normal term for a float loan is 24-30 months.

The interest rate on the Float Loan will be negotiated based on the contribution the project will make to job creation or retention.   Typically these loans are made at rates well below prime.

Note: Funds extended under the CDBG Float Loan Program are already committed to other jurisdictions that anticipate using the funds when the loan matures. While Commerce structures a Float Loan with every expectation that the loan will not be called prior to maturity, there is a remote possibility that the loan may be called early to honor the original commitment.