Small / Micro Business Financing
Since 1997, Nebraska Enterprise Fund has been a Certified Community Development Financial Institution (from the CDFI Fund, U.S. Department of Treasury). Through its history, NEF has provided capital to programs. In 2010, NEF began formalizing policies to help fill loan capital gaps to micro businesses throughout Nebraska with the use of direct and collaborative loan products. NEF works in participation with other lenders and programs, whenever possible, to fill financing gaps for businesses. NEF offers a credit enhancement CD guarantee pledge for banks working with micro business borrowers in Nebraska. This product allows NEF direct participation with financial institutions /banks across Nebraska by providing an “extra” guarantee or the security necessary to assist the small /micro business borrower in securing a loan from Nebraska banks. NEF also offers micro /small business loans direct to business borrowers. These products match NEF’s mission in assisting to connect individuals and businesses with capital resources to start and/or grow their enterprises.
NEBRASKA ENTERPRISE FUND CD GUARANTEE LOAN PRODUCT for MICRO /SMALL BUSINESSES
NEF’s Guarantee Product using a certificate of deposit (CD) – This unique credit enhancement product allows the Nebraska Enterprise Fund (NEF) to directly participate with financial institutions in business lending by providing an “extra” guarantee or the security necessary to assist the small /micro business borrower in securing a loan from Nebraska banks. This product matches NEF’s mission in assisting to connect individuals and businesses with capital resources to start and/or grow their enterprises.
CD Security Pledge - NEF’s cash guarantee is held in a certificate of deposit at the financial institution that provides a business loan to its customer. The certificate of deposit (CD) is owned by NEF and pledged as security to the bank or credit union for the specific designated business loan to the customer. The financial institution pays NEF an interest return on the CD and the business borrower pays an annual fee to NEF for the use of the CD as loan security.
For more details, NEF encourages Nebraska business bankers to contact NEF.
NEBRASKA ENTERPRISE FUND DIRECT LOAN PRODUCT for MICRO /SMALL BUSINESSES
DIRECT LOAN PROGRAM Information
Loan Purposes: The purpose of NEF direct loan program is to provide lending capital to micro /small businesses in Nebraska for new business start-ups, business transition or to expand, grow or strengthen existing businesses. Eligible uses of NEF loan funds are for the purchase or upgrade of machinery or equipment, furniture, facilities including business real estate, fixtures, supplies, or working capital. Eligible uses, loan terms and loan amounts can vary depending on the source of NEF loan capital.
Project Eligibility: Eligible businesses are by definition “micro” businesses (10 or fewer employees), and are a for-profit entity (sole-proprietorship, partnership, or corporation) legally doing business in Nebraska. NEF loan capital may not be used to refinance a non-performing loan held by a financial institution or for any illegal purpose.
Loan size: NEF direct business loans typically range from $5,000 to approximately $150,000. Larger NEF loans may involve more than one lender.
Gap Financer: NEF collaborates with other lending programs or financial institutions when gap financing is needed. NEF works with business clients most typically based on referrals from NEF program partners or financial institutions, however, business owners and individuals that are planning new businesses may contact NEF directly. NEF can provide a direct loan in conjunction with a bank loan or another micro program lender. In addition, a unique gap financing product that NEF offers is a certificate of deposit guarantee (CD Guarantee limited to $40,000) to assist banks and credit unions lend to small businesses based on the credit and security needs of the total loan package.
Loan Terms: Terms will be based on the project, use of loan proceeds, risk and collateral. Loans for building and land will be limited to a maximum of 15 years. Loans for equipment will carry a term that does not exceed the useful life of the equipment. Working capital loans will be scheduled for no more than 3 to 5 years. NEF reserves the right to reduce or increase maximum loan amounts, terms of renewal, interest rates and repayment structures.
Loan Security: NEF loans must be secured and in most cases, personal guaranties are necessary. For larger size loans, real estate and building / facilities will be required as collateral.
Loan Application Preparation: Potential borrowers must be prepared with solid business projections, a business and marketing plan and typically have utilized technical assistance and/or training provided by NEF program partners or the Nebraska Business Development Centers. NEF can also provide technical assistance as needed in preparation of loan application materials.
NEF is an equal opportunity provider, employer, and lender.