PROGRAMS

Loan Guaranty Program

Through the Loan Guaranty Program, the Virginia Small Business Financing Authority will guarantee a portion of a loan or line of credit extended by a commercial bank to a qualified Virginia business. With a guaranty from VSBFA, the bank benefits by reducing its risk in lending to the Virginia business, and the business benefits by accessing financing it would not otherwise have been able to obtain.

The maximum guaranty under the program is 75% of the loan or line of credit up to a maximum guaranty of $500,000. The program can be used to provide a guaranty for a short-term line of credit or a term loan of up to three years in duration. An application fee of $200 must accompany the application package. If approved, a guaranty fee of 1.5% on the guaranteed portion is due at closing.

Applications for the Loan Guaranty Program are made by the bank requesting the guaranty. Unlike traditional government guaranty programs, the Loan Guaranty Program requires very limited paperwork and offers the bank great flexibility in loan structuring. (For banks wishing to use the program, please see the instructions to the program application for more information.)

To apply for financing through LGP, a business makes application to a bank operating in Virginia.(See the Participating Bank List for a current list of the banks participating in VSBFA programs.)

To qualify as an applicant under the program, the Virginia business must meet the VSBFA criteria for an eligible business. If a business is interested in accessing financing through the program, the business should first consult with a bank about their financing request. If the bank determines that VSBFA’s guaranty is needed, the bank and the borrower must complete the Loan Guaranty Application and submit it, along with all required attachments, to the VSBFA for consideration.

Click here for a Loan Guaranty Program Fact Sheet in a printer friendly format.

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