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Financing


 
Whether you’re a startup looking to open your first location or an established business looking to expand, securing all the necessary financing to turn your business opportunities into reality can be a difficult task. 
 
We understand that every business is unique. Our goal as local government is to provide the kinds of lending tools that the traditional financing marketplace lacks. 

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, DEDO 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 undertaking such projects with their city permitting process.
 

  • 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.

  • 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 should contact the DEDO Business Development team at 720.913.1999 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, we 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 DEDO.

  • 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, DEDO 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.

Let's talk about your business! Please contact DEDO's Business Development team at 720.913.1999.

Microlending Program

Denver’s new Microlending Program provides lending capital and support services to small businesses and entrepreneurs who lack access to traditional and conventional capital sources. Our goal is to help create, retain, stabilize, and expand local small businesses.

This program can provide small loans of up to $50,000. The program’s broad goals encompass financial empowerment, community and individual wealth-building, job creation and retention, and neighborhood stabilization. 

Loans from $5,000 to $50,000 with terms up to five years are available to both startup or expansion phase companies.

This program is also focused on support small businesses' stabilization efforts during the COVID-19 epidemic. For more information about the Denver Microloan Program and how to apply, visit our lending partnert's website

The intended applicants for this program meet some or all of these characteristics:

·         Companies will less than $1 million in gross revenues

·         Challenged with obtaining business financing through financial sources

·         Low- to moderate-income, both as existing or aspiring entrepreneurs

·         Strong links to neighborhood placement/preservation and service in Globeville, Elyria/Swansea, Montbello, East Colfax, Westwood, or Sun Valley

·         Minority or women-owned (i.e., at least 51% of the business)

·         Multi-generational ownership

·         Goal to create or retain full-time jobs in the such industries of as manufacturing, technology and agriculture technology, outdoor recreation, professional/financial business services, health care and bio sciences, energy, or authentic and vibrant retail and hospitality

·         Certified through Denver’s Division of Small Business Opportunity (DSBO)

 

Community Enterprise Development Services (CEDS) has unique experience identifying promising business start-ups or expansions and underwriting small business loans for what are sometimes marginalized and underserved businesses.

Their ability to work with under-connected entrepreneurs and small business owners is evident from their track record. Of the loans CEDS issued in 2018 to Denver clients, 96% were issued to minority borrowers; 61% immigrant/refugee borrowers; 14% formerly incarcerated borrowers.  CEDS offers interest rates that are lower than most financing entities in the region for non-traditional loans. 

Let's talk about your business! You can contact:

  • DEDO's Business Development team at 720.913.1999
  • Community Enterprise Development Services (CEDS) at info@cedsfinance.org or 303.569.8165

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 DEDO Business Development team at 720.913.1999.

DEDO periodically updates 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 the city? 
“Gap” financing may be available up to 25% of total project cost under the Revolving Loan program, with a cap of $350,000. In the Microlending program, loans are capped at $50,000.
 
What is the lending rate or what is it based on?  
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, while DEDO's participation is at a below market rate. 

How long do I have to repay a city loan?
A Revolving Loan Fund 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. The Microlending Program loans do not exceed five years.
 
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. 

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 lender 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, and so on). 

 

Contact Us

Contact DEDO's Business Development team at 720.913.1999 for more information.
 

Location & Hours
101 W Colfax Ave
Denver, CO 80202
Hours: 8:00 a.m. - 5:00 p.m.

 

Denver Economic Development & Opportunity


Phone: 720-913-1999

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