Business Financing Options

Local Programs

Industrial Revenue/Development Bonds (IRBs)

IRBs are security obligations issued by municipalities and counties on behalf of a particular business entity. IRBs allow governmental units to serve as a financing conduit for business. The IRBs are not backed by the full faith and credit of the issuing governmental unit, thus the ability of a company to use this type of financing is incumbent on its own financial strength and ability to repay the obligations. 

Presented by:

Pioneer Country Development, INC.
P.O. Box 248
Hill City, Kansas 67642
785-421-3488
nwkpdc@ruraltel.net

Workforce Training Programs

Kansas Industrial Training (KIT)

The KIT program is a comprehensive and flexible workforce training program designed to respond to the specific needs of new or expanding companies. Eligible industries include enterprises that are creating at least one job. Industries available include manufacturing, distribution, regional or national service facilities and other businesses primarily engaged in the development or production of goods or the provision of service of out-of-state sale.

Kansas Industrial Retraining (KIR)

The KIR program assists employees of restructuring industries who are likely to be displaced because of obsolete or inadequate job skills or knowledge. KIR funds can be used to pay off some retraining costs that are eligible under the KIR program. The KIR program requires matching dollar of dollar funds from the company. Eligible industries include enterprises that are restructuring their operations through incorporation of existing technology, development and incorporation of new technology, diversification of production or the development and implementation of new production activities. At a minimum, at least one employee must be trained under the project to qualify for assistance.

State of Kansas Investment in Major Projects and Comprehensive Training (IMPACT)

The IMPACT program may be utilized by individual businesses or consortiums of companies adding new jobs. Like the KIT program, IMPACT is intended to help companies offset the cost of training employees for new jobs; however, the funding capacity is substantially larger because the number and average wages of the new employees determine the project funding limits.

Kansas Development Finance Authority (KDFA)

Kansas Beginning Farmer Loan Program

The KDFA administers a federal program for beginning farmers. This program allows Kansans who have agricultural experience, but have never owned significant amounts of farmland, to secure below-market interest rate financing on purchases of agricultural land, improvements, equipment and breed stock. 

Kansas Technology Enterprise Corporation

Ad Astra Seed Capital Fund

Through KTEC Holdings, Inc., the Ad Astra Seed Capital Fund, KTEC provides financing for Kansas advanced technology companies at their earliest stage of development. Funds are used for, but not limited to, prototype testing and refinement, field testing and initial marketing assessment and development. To be considered for a seed capital investment, a firm must demonstrate that the innovation will provide a competitive edge in the marketplace; significant employment will be generated in Kansas; and sufficient capital is unavailable through traditional financing sources. The goal of seed capital investment is to read the company for venture capital.

State Programs

Community Development Block Grants (CDBG)

The CDBG is used to assist communities in the attraction and expansion of industry. The financing available through this program is awarded five times a year on a competitive basis. The CDBG funds are available to cities with a population of less than 50,000 or counties of less than 200,000 in population. The regulations require that one job be created for every $35,000, and the maximum grant funds available through the CDBG program is $750,000.

Export Loan Guarantee Program

Kansas is one of the few states to have its own export loan guaranty program. The export guaranty can help a small company obtain financing to pay the costs associated with an export sale. This guaranty can assist a manufacturing company in obtaining a loan to pay for raw materials and the components necessary to manufacture products for an export order.

Kansas Partnership Fund

This program provides low-interest loans to cities and counties for infrastructure improvements that support basic enterprises. The loans are designed to assist city and county governments in their efforts to attract new businesses and expand existing businesses. All cities and counties in Kansas are eligible to apply. 

Kansas Enterprise Zone Act

The Kansas Enterprise Zone Act established a non-metropolitan regional business program which will provide a business expansion and development incentives on a state-wide basis. To be eligible for these incentives, manufacturing and retail businesses (eligible for tax exemption only) must create two net new jobs. Non-manufacturing, non-retail businesses must create five jobs to qualify. Retail businesses are only eligible for the sales tax exemption if located in a community with a 2,500 population or less.

Federal Programs

Community Express SBA Guaranteed Loan

Community Express loans offer qualified small business owners unsecured loans ranging from $5,000 to $25,000 with a 7 year term, an interest rate of Prime + 4.50%, no prepayment penalty, minimal paperwork and a quick approval time. Business Loan Express is a non-traditional bank, which has a contracted arrangement with SBA to make these loans whereby Community Express receives an 85% guaranty from SBA. Community Express utilizes a credit scoring system based on credit score and payment ability to determine creditworthiness of the applicant. As part of the loan, borrowers are encouraged to receive technical assistance to better operate and grow their business. Potential users for the loan include a start-up that does not have sufficient collateral or down payment, an existing business, which needs some additional working capital, or gap financing to offset some of the bank’s risk in doing a larger project.

SBA Loan Express Program

SBA Loan Express is an SBA Guaranteed Loan through your local bank that has completed the paperwork to be a designated SBA Loan Express Lender, whereby the lender will receive a 50% loan guaranty from SBA. The bank makes the credit decision, and the loan is completed on the bank’s loan paperwork. The loan is a maximum of $350,000. It can be an amortized loan or a line of credit loan for a maximum of seven years, plus the terms and interest rates are determined by the bank. The loan application has minimum paperwork to complete to be submitted to your banks for approval. 

SBA 7(a) Loan Guaranty and Low Doc Programs

The SBA guaranty loans are made by a private lender, usually banks, and are guaranteed by SBA. The maximum guaranty is $1,000,000 and the interest rates can be fixed or variable— typically not to exceed 2.75% over the prime rate of the Wall Street Journal. SBA will guaranty 85% of loans up to $150,000 and 75% of loans greater than $150,000. Loan proceeds can be used for land, buildings, construction and renovations, machinery and equipment, working capital and inventory. In certain situations, debt refinance can be included in the SBA guaranteed loan. If the loan request is less than $150,000, a Low Doc application may be used— a simple two-page application. Generally, SBA makes a decision on the Low Doc application within three days of submittal to the Sacramento, CA office. On guaranteed loans up to $150,000, SBA allows the bank to retain 25% of the guaranty fee.

Certified Development Company (504) Loan Program

The SBA 504 loan program is a partnership between the SBA, a Certified Development Company (CDC) and a private lender in 10 to 20 year term financial packages. The loan proceeds are to be used to assist small businesses with plant acquisition, construction, conversion or expansion. This includes the acquisition of machinery and equipment with a useful life of at least 10 years. The 504 program cannot be used to provide working capital or to refinance existing debt. A SBA 7(a) guaranty can be submitted in conjunction with the 504 application for working capital, inventory, etc.

SBA Disaster Loan

Disaster assistance can be made when the President of the Administrator of the SBA declares a specific area to be a disaster area. There are two types of disaster loans, (1) Physical Disaster Loans and (2) Economic Injury Disaster Loans. Physical Disaster Loans are made to homeowners, renters, businesses (large or small) and nonprofit organizations for the purpose of repairing or replacing damaged or destroyed homes, personal property and business property. Economic Injury Disaster Loans are made to small businesses which suffer substantial economic injury because of the disaster. Loan proceeds may be used for working capital and to pay financial obligations which the small business could have met if the disaster did not occur. These loans are generally at an interest rate of 4%.

U.S. Department of Agriculture Business and Industry Loan Program

The U.S. Department of Agriculture, through its Business and Industry Loan Program, guarantees loans from local lenders to businesses and industries to benefit rural areas. A primary purpose of the program is to create and maintain employment as well as improve the economic and environmental climate in rural communities.

Rural Business Enterprise Grant

The grant is to support the development of small and emerging private business enterprises located in a rural area. The grant is made to local governments or private non-profit corporations in rural areas with a population of less than 50,000, which in turn lends the proceeds to the business. These funds can be used by the local government or non-profit corporation to set up a revolving loan fund. Generally, these grants are in the maximum amount of $50,000.

Rural Economic Development Loans and Grants (REDLG)

This program finances economic development and job creation projects in rural areas based on sound economic plans. REDLGs are available to any Rural Utilities Service electric or telecommunications borrower to assist in developing rural areas, to create job opportunities, and to retain existing employment. 

U.S. Department of Commerce Economic Development Administration

EDA Grant

This a true grant to a city or county for the purpose of providing infrastructure for a project. Examples are construction of roads, water lines and sewer for a business development project. It can provide up to 50% or 60% of the project costs for eligible counties. It is based on creation or retention of jobs. The maximum available is $1 million or the dollar amount that is available at the time of grant application. Eligibility is based on per capita personal income and/or unemployment rates.

Business Financing Options

The financing of a business venture can come from a variety of sources; however, it takes careful planning and research to discover the available financing that would be best for your business development.  To apply for any of the below business financing programs, or for more information, contact:

Pioneer Country Development, INC.
P.O. Box 248
Hill City, Kansas 67642
785-421-3488
nwkpdc@ruraltel.net