Arkansas Small Business
What Is It?
A loan guarantee program providing a source of capital to Arkansas Small
Business Enterprises and administered by the Arkansas Development Finance
- Addresses the working capital needs of small
businesses that perform governmental and/or private contract work,
including service contracts.
- ADFA provides a loan guarantee to lenders up to 80%
of the first $200,000 loan amount with maximum loan guarantee of
$160,000, who in turn lend to small businesses that have government or
private contracts but lack the necessary cash flow to adequately finance
their working capital needs.
- Loans are at a market rate for a term of 180 days
with an optional renewal for an additional 180 days.
- Can be used in conjunction with other ADFA programs
such as Capital Access.
- Cost of the guarantee is 1% per 180 day maturity with
another 1% due if optional renewal is exercised for a maximum of 2%.
What Does It Do
- Helps Small Business obtain financing for labor and
materials necessary to complete specific governmental and/or private
contracts including service contracts.
- Helps Small Businesses build Lender relationships.
Sequence of Events:
Prior to applying for a Loan Guarantee, the Small
Business with an opportunity to bid on a contact will contact a Lender
for a Line of Credit Loan and determine the amount of Working Capital
necessary to complete the contract.
Once a contract is awarded, complete the required
documentation for formal approval from the bank. After the bank approves
the loan, the application is forwarded to ADFA for its approval and
issuance of the Loan Guarantee Agreement. Initial ADFA approvals are
done by a Loan Committee appointed by the ADFA Board Chairman with
ratification by the full Board at the subsequent meeting.
Usual components of the loan application:
- Details of the project, contract history and work experience of
- Applicant financial statements, credit information, loan repayment
ability in the event of default;
- Collateral availability and borrower’s personal guarantee;
- Contractor’s ability or inability to secure conventional financing
- Values of contract in comparison to loan
If you are interested in finding out more about
this program, contact:
Bev Lambert - Phone: 501-682-5912