Illinois Finance Programs
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Below is a brief description of the attractive loan programs available in the state of Illinois. The programs are offered by various Illinois state offices and the St. Louis RCGA and the Illinois Department of Commerce and Economic Opportunity can help coordinate the application process.
Southwestern Illinois Development Authority
Community Service Block Grant Loan Program (CSBG)
Illinois Capital Access Program (CAP)
Illinois State Treasurers Office (STEP and ER Programs)
Enterprise Zone Loan Participation Program
The Illinois Finance Authority
Manufacturing Modernization Loan Program
Minority, Women, and Disabled Participation Loan Program (MWD/PLP)
Participation Loan Program (PLP)
Port District Loan Program
Revolving Line of Credit Program (RLOC)
Rural Micro-Business Participation Loan Program
Community Service Block Grant (CSBG) Loan Program The CSBG Loan Program is administered jointly by the Illinois Department of Commerce and Economic Opportunity (DCEO), statewide Community Action Agencies (CAAs) and Illinois Ventures for Community Action (IVCA). The Program provides long-term, fixed-rate financing to new or expanding small businesses in exchange for job creation and employment for low-income individuals. CSBG funds usually make up between 20-49% of the entire loan project and have a low interest rate of 5% to 7.5%.
Authorization
The Community Services Block Grant (CSBG) program was created by the federal Omnibus Budget Reconciliation Act of 1981. The Illinois Department of Commerce and Economic Opportunity (DCEO) administers the CSBG program in accordance with federal law and the Illinois Economic Opportunity Act.
How the Program Works
The Department of Commerce and Economic Opportunity places a high CSBG priority on job creating economic development programs which result in the employment and self-sufficiency of low-income persons. Each Community Action Agency (CAA) designs and operates an individualized economic development program. Ten percent of each CAA's annual CSBG funding is allocated for economic development/job creation activities. Most CAAs operate a loan program through which below market rate loans are made for business expansion and start-up which results in the hiring of low-income persons. For more information on CSBG programs and eligibility requirements click here.
Illinois Capital Access Program (CAP) The Illinois Capital Access Program (CAP) is designed to encourage financial institutions to make loans to small and new businesses that do not qualify under conventional lending policies. CAP is a form of loan portfolio insurance, which provides additional reserve coverage to the lender on loan defaults. By participating in CAP, lenders have available to them a proven financing mechanism to meet the needs of financial institutions and Illinois small businesses.
Authorization
The grants shall be made from appropriations from the Build Illinois Bond Fund or Illinois Capital Revolving Loan Fund for the purpose of technical assistance. See Chapter 127 of the Illinois Compiled Statutes.
How the Program Works
The Capital Access Program is designed to encourage lending institutions to make loans to businesses that do not qualify for conventional financing. CAP is based on a portfolio insurance concept where the borrower and DCEO each contribute a percentage of the loan amount into a reserve fund located at the lender's bank. This reserve fund enables the financial institution to make loans beyond its conventional risk threshold and is available to draw upon to recover losses on loans made under the program.
A CAP loan is a private market transaction between the lender and the borrower with all terms, fees, conditions, rates, collateral, etc., being determined by the lending bank. The borrower's non-refundable contribution to the reserve fund must be between 3 and 7 percent of the total loan amount. DCEO will provide a matching contribution. A 133 percent match to the borrower's contribution will be provided on the first $2,000,000 in CAP loans enrolled at the lender bank. A higher match will be provided to minority/woman/disabled owned businesses (150 percent) and businesses located in a federally designated Empowerment Zone or Enterprise Community (200 percent). Loan proceeds cannot be used for debt refinancing or for financing passive real estate ownership.
The business must be for-profit, located in Illinois and employ 500 employees or less. The borrower cannot be in the business of manufacturing or selling firearms at wholesale or retail; or in the business of manufacturing or selling tobacco products, liquor or sexually explicit materials at wholesale.
Illinois State Treasurer’s Office The Illinois State Treasurer’s Office offers a number of programs that are designed to assist the Illinois business community by providing access to capital and financing at affordable rates in order to promote economic development activities that create and retain jobs within the state. To view the Treasurer’s programs please click on the link above. The STEP program and the ER program detailed below are part of the Treasury loan offerings.
Authorization
The Illinois State Treasurers Office programs are authorized by legislation in 20 ILCS 715/5.
How the Programs Work - for more information on all programs click here.
State Treasurer’s Economic Program (STEP) - Administered through the Illinois State Treasurer’s Office, the STEP program is designed to provide Illinois companies with access to affordable capital to expand their operations and retain or create jobs in the state. For each permanent full-time job that is created or retained, the Treasurer can deposit up to $25,000 per job at below market rates into a qualified borrowers financial lending institution. The lender may then loan that money to the qualified borrower. Loans may not exceed five years. For further information click in the program title above.
State Treasurer’s Economic Recovery Loan Program (ER) - Administered through the Illinois State Treasurers Office, the ER program is designed to stimulate Illinois economy by providing out-of-state companies that create jobs in Illinois, access to capital at below market rates. This program is primarily geared (but not limited) to job creation in the manufacturing sector. For each permanent full-time job that is created or retained, the Treasurer can deposit up to $50,000 per job at below market rates into a qualified borrower’s financial institution. Retail projects are ineligible for this program. For further information click in the program title above.
Enterprise Zone Participation Loan Program (EZ/PLP) The EZ/PLP is a variation of the conventional PLP Program, in that DCEO subordinates the loans through participating lending institutions, but the EZ/PLP may be able to provide small businesses located in an enterprise zone a more attractive loan rate than a conventional PLP.
Authorization
The EZ/PLP program is authorized by the Illinois Enterprise Zone Act found in statute 70 ILCS 520/10 from Ch. 85, par. 6160.
How the Program Works
The EZ/PLP is a variation of the conventional PLP Program, in that DCEO subordinates the loans through participating lending institutions, but the EZ/PLP may be able to provide small businesses located in an enterprise zone a more attractive loan rate than a conventional PLP.
Enterprise Zone PLP Program is designed to encourage economic development and neighborhood revitalization in Illinois Enterprise Zones. DCEO can provide below-market subordinated financing to companies located in or expanding in an Illinois Enterprise Zone. The participation works the same as a conventional PLP, but offers an incentive rate of 200 basis points below index rate on DCEO's portion of financing for variable rate loans, with fixed and adjustable rate loans being comparable with U.S. Treasury notes plus 0-1%. Funds available through these three programs can be used for a number of business activities, such as purchase and installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings. Funds cannot be used for debt refinancing or contingency funding.
Any for-profit small business operating in Illinois which has, including its affiliates, fewer than 500 full-time employees, and is located within an Illinois designated enterprise zone, is eligible for participation in this program.
Enterprise Zone Map
A list of Illinois Enterprise zones can be found here.
The Illinois Finance Authority (IFA) The Illinois Finance Authority (IFA) is a self-financed, state authority principally engaged in issuing taxable and tax-exempt bonds, making loans, and investing capital for businesses, non-profit corporations, agriculture and local government units statewide. IFA finances about $3 billion each year, helping generate economic growth and job creation.
Authorization
The Illinois Finance Authority is authorized by Illinois Statutes 20 ILCS 3501/845-75.
How the Program Works
IFA Industrial Revenue Bonds (IRBs) - Administered through the Illinois Finance Authority, the industrial revenue bond program provides the authority with the ability to issue tax exempt IRBs on behalf of Illinois manufacturers looking for long term financing on the purchase or renovation of fixed assets such as land, building, and equipment. IRBs may finance up to 100 percent of the total costs for qualifying projects of at least $1.5 million. Terms of the bonds may not exceed 10 years. A $1,500 non- refundable fee is required upon submission of application. If approved certain other fees will apply. For further information click in the program title above.
IFA Participation Loan Program (IFA PLP) - Administered through the Illinois Finance Authority, the IFA PLP program is designed to provide Illinois industrial and manufacturing businesses that create or retain jobs, access to affordable financing. Participation loans can provide financing for the purchase of land or buildings, construction or renovation of buildings, and the purchase of machinery and equipment. The authority can participate with conventional lending institutions and provide the lesser of $300,000 or 50 percent of the loan with terms not to exceed 10 years. For further information click in the program title above.
IFA Rural Development Loan Program - Administered through the Illinois Finance Authority and in participation with the Farmers Home Administrations Intermediary Re-lending program, the Rural Development Loan program is designed to assist industrial businesses located in rural communities with a population of less than 25,000. Eligible projects must demonstrate the creation or retention of Illinois jobs, and must demonstrate that conventional financing was not available. The authority may lend up to 75 percent of project cost up to $150,000 at a set fixed rate of 6 percent. A $100 application fee is required as well as a $225 commitment fee and a $225 loan-servicing fee. For further information click in the program title above.
IFA State Guarantee Program for Agri-Industries - Administered through the Illinois Finance Authority, this program is designed to aide farmers and agribusinesses that wish to diversify into new enterprises or to further process existing crops or livestock. Loans can be made to farmers or agribusinesses to purchase new or used property, equipment, or other capital items that will be used to enhance or add value to the agriculture product or process. Loans are made through a local lender who receives an 85% guarantee on the principal and interest of the loan. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower. For further information click in the program title above.
Manufacturing Modernization Loan Program The Manufacturing Modernization Loan Program is designed to provide manufacturers with access to adequate and affordable financing for upgrading and modernizing their manufacturing equipment and operations.
Authorization
The Manufacturing Modernization Loan Program is authorized by state statute 30 ILCS 750.
How the Program Works
To remain competitive in the global economy manufacturers must continually update their equipment. Investing in new technologies allows manufactures to increase production capacity and efficiency. The goal of this program is to make adequate and affordable capital available to Illinois manufacturers for retooling, equipment upgrades, and facility expansion.
DCEO will participate with local lending institutions in loan amounts of a minimum of $10,000 and a maximum of $750,000, or 25% of the total project, which ever is less. The participation amount will be at sub-prime rates. The term of the loan is a maximum of 10 years, and a fee of 1-2% of loan amount may be required.
Existing Illinois manufacturing companies that employ less than 500 full-time workers, and are retooling, upgrading their equipment, or expanding their business are eligible for this program. Examples of eligible projects include: acquisition and development of land, building costs, fixtures, machinery, new and used equipment.
Minority, Women, and Disabled Participation Loan Program (MWD/PLP) The MWD/PLP program is a variation of the conventional PLP, in that DCEO subordinates the loans through participating lending institutions, but the MWD/PLP program can provide Illinois small businesses that are 51 percent owned and managed by persons who are minorities, women, or disabled, with loans up to $50,000 or 50 % of the total project.
Authorization
The MWD/PLP Loan Program is authorized by state statute 30 ILCS 750.
How the Program Works
Funds available for this program can be used for a number of business activities, such as purchase and installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings. Funds cannot be used for debt refinancing or contingency funding. The Department’s interest rate will be established at the time of its loan commitment. DCEO’s interest rate on this program variation may be lower than on a regular participation.
Any for-profit small business operating in Illinois which has, including its affiliates, fewer than 500 full-time employees and meets the criteria of a minority, women or disabled owned business is eligible for participation in the program. A minority, women or disabled owned business is a business which is at least 51 percent owned by one or more minority, women or disabled persons and the management and daily operations of the business are controlled by one or more of the minority, women or disabled persons who own it. A minority shall mean a person who is a citizen of the United States, and who is African American , Hispanic, Asian-American, American Indian, or Alaskan Native. Disabled shall mean a person with a physical or mental impairment that substantially limits one or more of the major life activities of an individual.
Participation Loan Program (PLP) The PLP program is designed to work through banks and other conventional lending institutions, to provide subordinated financial assistance to Illinois small businesses that employ Illinois workers. A business with 500 or fewer employees may apply for a PLP loan of not less than $10,000 nor more than $750,000. Loans shall not exceed 25% of the total project and may not be used for debt refinancing or contingency funding.
Authorization
The PLP Loan Program is authorized by state statute 30 ILCS 750.
How the Program Works
Funds available through the PLP program can be used for a number of business activities, such as purchase and installation of machinery and equipment, working capital, purchase of land, construction or renovation of buildings. Funds cannot be used for debt refinancing or contingency funding. Participating lending institution shall be responsible for reviewing applications for eligibility and setting terms.
Any for-profit small business operating in Illinois which has, including its affiliates, fewer than 500 full-time employees is eligible. A Minority, Women or Disabled owned business is a business which is at least 51 percent owned by one or more minority, women or disabled persons and the management and daily operations of the business are controlled by one or more of the minority, women or disabled persons who own it.
Port District Loan Program DCEO manages the Port Development Revolving Loan Program to provide loans to Illinois port districts to facilitate and enhance the utilization of Illinois' navigable waterways and the development of inland intermodal freight facilities. Up to $3 million loan funds will be made available on a competitive basis.
Authorization
DCEO is authorized by the Illinois Small Business Development Act (30 ILCS 750/9-11) a/k/a the Port Development Revolving Loan Program
How the Program Works
The Department requires applications for the Port District Revolving Loan Program to be received in DCEO’s Springfield office at the address below by close of business April 10, 2006 in order to be considered. Port District representatives may request a program description and loan application from the Business Finance Division at (217)782-3891, or e-mail to jdavis1@ildceo.net.
Revolving Line of Credit Program (RLOC) The RLOC program can provide qualifying businesses with a subordinated line of credit through banks and other convention lending institutions at affordable interest rates.
Authorization
The Revolving Line of Credit Program is authorized by state statute 30 ILCS 750.
How the Program Works
The Revolving Line of credit program is appropriate for businesses with 500 or fewer employees having seasonal or variable working capital demands. A revolving line of credit allows a business to borrow the amount of money needed to meet the demand for its product/service sales and to repay the loan from the sales revenues. A RLOC loan permits a company to borrow, repay and re-borrow in accordance with business needs, without applying for a new loan. Generally, the program may provide subordinated lines of credit to small business at attractive interest rates for up to 25% of the total amount , but not less than $10,000 or more than $750,000. The lender is responsible for the review and verification of the information in the application, the initial approval and setting the loan terms. Typically, the Department will not participate for more than three years. Before submitting an application, the lender must have a signed RLOC agreement with DCEO.
Rural Micro-Business Participation Loan Program The Rural Micro-business Participation Loan Program is a variation of the Participation Loan Program designed to provide subordinated loans of up to 50% of a project (maximum $25,000) to Illinois Rural Micro-businesses through participating lending institutions.
Authorization
The Rural Micro Business PLP Loan Program is authorized by state statute 30 ILCS 750.
How the Program Works
A rural micro-business is a for profit business that: (i) employs 5 or fewer full-time employees, including the owner if the owner is an employee, and (ii) is based on the production, processing, or marketing of agricultural products, forest products, cottage and craft products, or tourism. The borrower is required to provide equity of at least 10% of the project up to $1,000 (10% of a $10,000 project). Funds cannot be used for debt refinancing or contingency funding.
The Rural Micro-business Participation Loan Program is subject to annual funds allocation. Applications will be accepted provided funds are available. At least 80% of available funds will be allocated to applicants located in counties with populations of 100,000 or less.
The Department’s interest rate will be established at the time of its loan commitment, will usually not exceed the lender’s rate and may be less. DCEO’s interest rate on this program variation may be lower than on a regular participation. In no event shall the Department’s rate be less than three percent. Rate estimates may be obtained for proposed projects by contacting the Department.
