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Collateral Assistance Fund

Providing Collateral Assistance to Howard County Small Businesses

Purpose:

The HCEDA (Howard County Economic Development Authority) Catalyst Loan Fund is a locally managed source of capital used to finance small, growth-oriented, and expanding businesses whose efforts will create permanent jobs and leverage private sector investment. In order to assist small, minority-owned businesses, including women-owned, U.S. veteran-owned, or businesses owned by other socially disadvantaged groups that are unable to qualify due to insufficient collateral, Howard County has provided the HCEDA with funds to institute a Collateral Assistance Fund.

The Collateral Assistance Fund is designed to aid eligible small businesses with obtaining HCEDA Catalyst loans, a financing source these businesses would otherwise qualify for, if sufficient collateral were available. As outlined in more detail below, using proceeds from the Collateral Assistance Fund, a certificate of deposit or similar account would be set up and held by the HCEDA, which then would serve as supplemental collateral to support an application for a Catalyst loan.

Collateral assistance is capped at $100,000.

Eligibility Guidelines:

  • Business must be located in Howard County.
  • Business must be profitable and must have been operational for at least 1- 2 years.
  • Cash flow and projections must be sufficient to repay obligations.
  • Borrower must demonstrate ability to repay debts, as indicated by a good credit history.
  • Business must be deemed capable of achieving projected goals, including the requested financing.
  • Business owner(s) may not own any real estate in the State of Maryland which could qualify to be pledged as collateral. If business owner(s) own any qualifying real estate in the State of Maryland it must be available to be pledged as collateral for the loan.
  • All individual business owner(s) who own 20% or more of the business must provide personal guarantees.
  • No prior bankruptcy within 7 years

Uses of Funds:

  • Working capital
  • Inventory/equipment purchase
  • Build-out/expansion costs or similar expense.

Note: The uses of funds must not include “retiring existing debt”

Application Process:

  • Any potential borrower must submit a complete Catalyst Fund Application package along with the required financials and a $300 non-refundable application fee. After review of an Application, it is at the sole discretion of the HCEDA to determine if an applicant qualifies for the Collateral Assistance Fund.
  • If approved for a Catalyst Loan with a collateral supplement through the Collateral Assistance Fund, the borrower will be entitled to pay a nominal commitment fee.

Review Process:

  • HCEDA will review compliance with the eligibility criteria and conduct the underwriting process of loan requests.
  • All Catalyst Loan requests utilizing the Collateral Assistance Fund are subject to review and approval by the HCEDA Incentives Committee.
  • Approvals are subject to availability of funds and at the discretion of the Incentives Committee.

Please contact our Loan Fund Manager at [email protected] for more information.