Revolving Loans

Small businesses are the backbone of our economy. They provide for 75% of all new jobs created, yet entrepreneurs often face difficulty in accessing capital through traditional lenders.

The Revolving Business Loan fund works to provide access to necessary funding, and in return, create jobs for our citizens. The City of Eureka’s Revolving Business Loan Program allow Small Businesses to apply for low-interest loans, and is funded by the State through the Community Development Block Grant (CDBG) Program. The City applies for this funding annually, and a portion is allotted to the loan program.

The City of Eureka CDBG Revolving Business Loan Fund (RLF) is designed to provide no more than half of a project’s total financing. The RLF will provide only the funds necessary to bridge the “financial gap” that allows the project to move forward. This program is especially targeted for businesses and projects that have potential for long-term job creation and retention, particularly for low income persons.

Funding equipment, inventory, capital and more

• Loans may range from $5,000 minimum to $50,000 maximum. The City of Eureka’s CDBG Revolving Business Loan Fund can provide up to half of a project’s total financing and can be used to finance:
• Inventory purchases
• Equipment acquisition
• Working capital / lines of credit
• Real property acquisition
• Furniture / fixtures

Loan requirements

Every loan granted must result in the creation and/or retention of at least one permanent full-time equivalent job for every $35,000 of funds loaned. At least 51% of permanent jobs created must benefit low- and moderate-income people as defined by CDBG..

Eligible businesses must be a “small business” as defined by the Small Business Administration (SBA). The SBA has established the following small business limitations:

• 500 employees for most manufacturing and mining industries
• 100 employees for all wholesale trade industries
• $6 million for most retail and service industries
• $28.5 million for most general and heavy construction industries
• $12 million for all special trade contractors
• $0.75 million for most agricultural industries

All loans are subject to review from an approved underwriter, the City of Eureka Loan Committee and Eureka City Council approval. When reviewing applications, particular attention is paid to small businesses and projects that have the greatest potential for long-term job creation and retention, especially jobs created and retained for economically disadvantaged workers. All loans require additional approval by the State Department of Housing and Community Development.

Loan Terms

All loans shall be fully secured by collateral, and unsecured loans shall not be made.

Types of collateral may include:

• Liens on real property
• Deeds of Trust
• Liens on machinery, equipment or other fixtures
• Personal and/or corporate guarantees
• Other collateral, as appropriate

The term of the loan is linked to the First Deed of Trust call, or a ten year maximum, depending on the asset being financed, the “financial gap”, and the demonstrated need for the funds.

The interest rate is linked to the City’s current earnings on investments, but is generally estimated at approximately 3%, as determined by City staff at the time of the loan commitment, and fixed for the duration of the loan.