Though the SBA does offer a variety of guaranteed loan programs, the agency has no funds for direct lending or grants.
The 7(a) Loan Guaranty Program provides short- and long-term loans to eligible, credit-worthy start-up and existing small businesses that cannot obtain financing on reasonable terms through normal lending channels. The SBA provides financial assistance through its participating lenders in the form of loan guaranties, not direct loans. SBA does not provide grants for business start- up or expansion. Loans under this program are available for most business purposes, including purchasing real estate, machinery, equipment and inventory, or for working capital. The loans cannot be used for speculative purposes. The SBA can generally guarantee a maximum of $2 million under the 7(a) program. The guaranty rate is 85 percent for loans of $150,000 or less, 75 percent for loans greater than $150,000, and 90 percent for loans made under the Export Working Capital Program. Generally the interest rate cannot exceed 2.75 percent over the prime rate as published in The Wall Street Journal, except for loans under $50,000, where the rates may be slightly higher. Maturity may be up to 7 years for working capital, 10 years for equipment and up to 25 years for fixed assets. Contact a commercial lender or the SBA’s Colorado District Office for more information on the following programs.
CHFA has been helping businesses access capital since 1982, and we are a trusted resource for the business community. We collaborate with a variety of lenders to offer innovative financing to help your business reach its full potential.
CHFA provides financing for growth and expansion. CHFA commercial real estate loans may be used to acquire real estate, expand an existing facility, and/or rehab an existing or new facility. Loan proceeds may also be used to acquire capital equipment.
Brownfields Revolving Loan Fund, a newly established partnership between CHFA, and the EPA, the Colorado Department of Health and Environment, and several municipalities throughout the state whereby funds are pooled by the partners and used to finance cleanup of environmentally contaminated commercial properties for future reuse or redevelopment. Financing terms include below market rates, flexible loan terms and creative loan structures. CHFA serves as the fiscal agent for the fund. For more information on CHFA’s loan programs, contact the Colorado Housing and Finance Authority, 1981 Blake St., Denver, CO80202.
These grants are provided to the State of Colorado by the U.S. Department of Housing and Urban Development (HUD). In turn, OEDIT uses these funds to assist rural communities with their economic development efforts. Businesses receiving CDBG assistance are required to create or retain jobs for low- and moderate- income persons. In some situations, businesses may be eligible if the owner of the business is of low- to moderate- income and the business qualifies as a microenterprise. OEDIT uses these funds to further economic development in two ways. First, the CDBG Infrastructure Program in sup- port of a specific business or businesses. Local government-sponsored projects may generally receive infrastructure grants of up to $500,000. Local matching funds may be required. Second, OEDIT provides financial resources to 15 regional Revolving Loan Funds (BLFs), which use the funds to make loans to businesses within their service areas. The BLF programs are available locally, each with its own loan review committee and Board of Directors. The BLFs have considerable flexibility to make small loans from a few thousand dollars up to $250,000. In some cases, loans greater than $250,000 have been approved. For both the Infrastructure and BLF Programs, applicants can be existing or start-up businesses. OEDIT and, when appropriate, the Governor’s Financial Review Committee reviews and approves all requests for funding.
NOTE: The stat’s CDBG program does not cover any of the metropolitan areas of Colorado (known as “entitlement” areas), because those areas receive their own allocation of CDBG funds directly from HUD. For more information on the CDBG programs, please contact OEDIT’s Finance Staff, or for loans, contact the BLF in your service area directly (see BLF listings).
The Colorado Venture Capital Authority (VCA) was established in 2004 to make seed- and early-stage capital investments in businesses. The VCA was allocated $50 million in premium tax credits, which it subsequently sold to insurance companies. The VCA selected fund manager High Country Venture, LLC, and established Colorado Fund I and Colorado Fund II, each with approximately $25 million.
High Country Venture is independently operated and generally makes funding decisions. State approval is limited to ensuring that businesses receiving funding meet minimum specified requirements. The minimum and maximum investment size generally ranges from $250,000 – $3.375 million.
Per the VCA Statute, the VCA is intended to manage the money as an evergreen fund; meaning, that the distributions received from Colorado Funds I & II are to be reinvested in future venture capital funds that meet the requirements of the VCA Statute. Accordingly, in 2018, the VCA invested proceeds from CO Funds I & II into a third fund, the Greater Colorado Venture Fund.
Opportunity Zones were enacted as part of the 2017 tax reform package (Tax Cuts and Jobs Act) to address uneven economic recovery and persistent lack of growth that have left many communities across the country behind. In the broadest sense, the newly enacted federal Opportunity Zone (OZ) program provides a federal tax incentive for investors to invest in low-income urban and rural communities through favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains. In Colorado, Opportunity Zones may help address a number of challenges:
This economic and community development tax incentive program provides a new impetus for private investors to support distressed communities through private equity investments in businesses and real estate ventures. The incentive is deferral, reduction and potential elimination of certain federal capital gains taxes. U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone— this is a significant untapped resource for economic development. Opportunity Funds provide investors the chance to put that money to work rebuilding the nation’s distressed communities. The fund model will enable a broad array of private equity fund managers and investors to pool their resources, increasing the scale of investments going to under-served areas.