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FINANCING

 
Whether you’re a startup looking to open your first store or an established business looking to expand, securing all the necessary financing to turn your business opportunities into reality can be a difficult task.  For established businesses that locate or expand in targeted industrial or commercial business areas within the city, OED's Business Development team can offer “gap” financing.
 
There are two gap financing programs available to businesses depending on their location:

Revolving Loan Fund

Securing the capital needed to start a new company or expand an existing operation has become increasingly difficult. Responding to that need, OED has developed the Revolving Loan Fund program (RLF) to enhance the ability of business owners to secure the necessary capital to finance business expansion projects. This gap financing program works by lending up to 25% of project costs, thereby inducing banks to provide the bulk of the financing for small businesses.

Besides filling the financial gap, the RLF program helps to stimulate job creation and revitalize under-utilized or deteriorated commercial and industrial properties. We can also assist businesses that locate in the RLF target area with the permitting process.

Click here for the Revolving Loan Fund map.

  • To create permanent jobs and retain existing jobs for low- and moderate-income Denver residents.

  • To provide economic opportunities in Denver's targeted industrial and commercial areas for new and expanding job intensive industries, including industries owned by minorities and women. 

  • To stimulate the redevelopment of under-utilized and deteriorated commercial and industrial property in Denver's RLF target area.

  • The applicant's project must be located within Denver's Revolving Loan Fund target area.
     
  • A majority of the new or retained jobs must be made available to low- and moderate-income Denver residents. These jobs should be entry level, or provide adequate training for entry level employees. Job recruitment efforts may need to be targeted to certain neighborhoods, and public transportation to the place of business should be adequate. Priority will be given to those loan applications that promote the creation of long-term, full-time employment, with good opportunities for career advancement and competitive wages.

  • New equity and new private financing must be maximized, fully committed to the project, and account for at least 75% of total project costs. For minority and women-owned businesses, private commitments must account for at least 70% of total project costs. 

  • City funding is limited to a maximum of $350,000 for each project, with a target of one job created for each $35,000 in loan proceeds. 

  • The applicant must provide sufficient evidence that the amount of funds requested from the city is necessary for the project to succeed. This evidence may show a gap in available financing to cover project costs, the rate of return to the investor(s) is too low, or project costs related to the site is not competitive with alternative sites. 

  • The applicant must demonstrate the ability to repay the city's loan and provide adequate collateral for securing the city's loan. 

  • City loan proceeds can be used for a variety of project costs, including real estate acquisition, new construction, rehabilitation, equipment purchases, and working capital. City funds cannot, however, be used for the refinancing of existing debt. 

  • Most construction costs funded by the city require payment of prevailing wage rates for construction workers. 

  • The interest rate, term, and amortization for the city's loan will be structured to allow for a reasonable rate of return to the investor(s) and adequate cash flow to service project debt. 

  • The applicant needs to contact a Business Development Representative (BDR) at OED to obtain additional information about this program, including the requirements for submitting an application for funding. If help is needed in preparing a loan application, the BDR can refer the applicant to available technical resources.

  • After the applicant has assembled the necessary information for a complete business plan, the next step is to secure all of the equity and private financing available for the project. The applicant can explain the city lending opportunity to investors and banks to further induce them to participate in the project. 

  • If sources of funding fall short or other economic deficiencies exist in the project, the applicant may submit an application for RLF funding to OED.

  • We will analyze the loan application and advise the applicant of any deficiencies which need to be addressed. Once an application is complete and meets the criteria for the RLF Program, we will recommend the application to the loan review committee for approval. The loan approval process takes approximately two weeks after a completed loan application is received. 

  • Once the loan application has been approved for funding, OED will request that the City Attorney prepare a formal loan agreement. Upon full execution and satisfaction of the contingencies of the loan agreement by the applicant, a loan closing will be scheduled. Depending upon the complexity of the loan application, the execution of the loan agreement and the loan closing process can take an additional four to six weeks.

For further information, please contact OED's Business Development team at 720.913.1999.

More Loans & Information

Any of Denver's community development corporations, in partnership with the Small Business Administration, can provide below market rate, long-term financing on commercial and industrial fixed assets located in Denver.

Eligibility

  • Owner-occupied properties
  • Commercial and industrial businesses
  • New construction or rehabilitation (permanent financing)
  • New project costs (no refinancing)
  • Total costs up to $3 million
  • Corporate net worth under $6 million
  • Profit after tax under $2 million
  • Demonstrated repayment ability


Features

  • Low down payment (10%)
  • Fixed interest rate
  • Low interest rate
  • 20-year amortization for real estate
  • 10-year amortization for capital equipment
  • No balloon payment
  • Loan origination fee averaging 3%
  • Loan approval in 30-60 days
  • Qualifying assumptions possible
  • Many soft costs eligible for financing
  • $35,000 for each new job created


Structure

  • 10% borrower equity
  • 40% CDC/SBA second deed of trust ($750,000 maximum)
  • 50% BANK/CHFA* first deed of trust

*In most instances, the Colorado Housing and Finance Authority (CHFA) will purchase a 90% participation in the first mortgage. Please check with CHFA on current interest rates and loan servicing fees.

For further information, you may contact the OED Business Development team at 720.913.1999.

OED's Business Development team offers a variety of programs and services to help your company obtain the level of "gap" financing required to meet your needs.  

Below is a complete list of forms and/or required information that is to be submitted when applying for a loan through OED.

Funding Sources for Entrepreneurs and Small Business

The Denver Office of Economic Development now offers an updated, sixthedition of the Denver Capital Matrix, a resource directory of funding sources for Denver small businesses and entrepreneurs. The matrix identifies funding sources, including traditional bank lending, venture capital firms, private equity firms, angel investors, mezzanine sources and others that have funded Colorado businesses. The matrix provides contact information and categorizes the investment focus of each listed organization.

How much can I borrow from an RLF or NBR loan? 
“Gap” financing up to 25% of total project cost under the RLF loan program with a cap of $350,000. “Gap” financing up to 50% of total project cost under the NBR loan program.
 
What is the lending rate or what is it based on?  
RLF and NBR interest rates are based upon a determination of what is necessary and appropriate for the transaction.  Typically, the private financing is made available at market rates and OED’s participation at a below market rate. 

How long do I have to repay a RLF or NBR loan?
The term of the loan can be from 5-15 years depending on the use of the funding, but the loan can be amortized over a longer period of time.

How long does it take to process a loan?
Preliminary approval of an application usually takes two weeks from the submittal of a complete application, including firm commitments of private financing.  The processing of a formal City loan agreement and the closing of the loan takes approximately 12 weeks. 

Can you refer me to a private financial institution to get the primary funding to complete the proposed project?
Private funding sources can come from banks (specifically banks you have relationships with), SBA guaranteed loans, Community Development Corporations, micro lenders, investors willing to invest capital and owner’s equity/contribution.  We encourage you to contact as many private lenders as necessary to secure their participation.   

Do I have to guarantee the loan?  How does Denver secure their loan?
All individuals who own at least 20% of the business will have to guarantee the loan.  In addition, the City will require the pledge of personal assets, if available, of all guarantor(s).  Denver normally takes a subordinated position to the participating bank on all business assets.

What are the important criteria you require to have a loan approval?

We look at the economic feasibility and evidence of repayment ability of the proposed project and benefits to the City (neighborhood impacts, creation of jobs, other economic development factors, etc.).    

 

Financing Under 50K?

For financing needs under $50,000, the best option may be to get in touch with a variety of local micro lenders through the Colorado Microfinance Alliance.

Contact Us

Contact OED’s Small Business Lending Group at 720.913.1999 for more information.