The Delaware Economic Development Office offers unique loan programs for a variety of businesses.
The Delaware Capital Access Program
This private-public match program gives banks a flexible, transparent tool to expand small business lending. By using a small amount of public resources to generate a large amount of private bank financing, the program provides more Delaware businesses access to bank financing.
Based on a risk-pooling concept, the Delaware Capital Access Program gives banks more flexibility to stimulate small business growth in the state.
Tax-Exempt Bond Financing
New or expanding businesses, governmental units and certain organizations exempt from federal income taxation can be eligible for statewide financial assistance in the form of tax-exempt bonds through the Delaware Economic Development Office.
Tax-exempt financing may be cost-effective for projects involving the issuance of more than $750,000.
All applications are reviewed for impact on Delaware’s economy. Eligible projects include the following major categories:
- Qualified 501(c)(3) Bonds: Tax-exempt bonds can be issued for the benefit of organizations that are tax-exempt under Section 501(c)(3) of the Code, if 95 percent of the net proceeds of the bonds are used by the organization in furtherance of its exempt purpose. Depending on the project being financed, certain other limitations may apply.
- Exempt Facility Bonds: Tax-exempt bonds can be issued to finance certain types of utility projects, including sewage facilities, solid waste disposal facilities, facilities for the local furnishing of electricity and gas, and other types of facilities.
Delaware Rural Irrigation Program (DRIP) Revolving Loan Fund
This revolving no-interest loan fund is available to qualified Delaware farmers to add new irrigation systems, including center pivot, linear move, towable systems, span angle systems, corner arm systems, single-phase systems, or wells and filters associated with drip irrigation systems.
The goal is to significantly increase the amount of irrigated cropland in the state. The program works with private lending institutions to provide borrowers with no-cost capital equal to the normal and customary equity requirements of a private loan.
DRIP is administered through the Delaware Department of Agriculture and the Delaware Economic Development Office.
How DRIP Works:
The program works in partnership with any private lending institution by providing the borrower with no-cost capital equal to the normal and customary equity requirements of a private loan. The loan fund would finance up to 25 percent of the total project cost, not to exceed $25,000, at zero interest for a term of no longer than seven years with repayment of principal beginning in year three of the loan. A bank or other lending institution must loan the remaining balance of the project.
Eligibility requirements include:
- Farmers must be actively engaged for at least two years in the growing and harvesting of cash crops such as corn, soybeans, fruits and vegetables in Delaware.
- Farmers must own or lease the land to be irrigated.
- The existing non-irrigated land must be located in the State of Delaware to grow crops.
- Funds may be used to drill new well(s), to acquire power units, and to fabricate and install new irrigation systems.
- All work must be performed by experienced and qualified contractors licensed by and located in the State of Delaware.
- Project financing is limited to one project per individual farm annually.
State Small Business Credit Initiative (SSBCI)
Small businesses in Delaware with fewer than 750 employees are eligible to apply for the State Small Business Credit Initiative (SSBCI).
This loan participation program is designed to enhance access to capital and lower interest rates. Loan proceeds can be used for any business expense — including payroll, inventory, machinery and equipment — and to supplement general working capital needs.
The Delaware Economic Development Office is authorized to fund up to 20 percent of this type of a loan, not to exceed $5 million. The maximum amount of Delaware Economic Development Office’s participation is $1 million. Below-market rates and flexible terms are available, and a five-year term or less is preferred.
Notable uses for lenders include collateral shortfalls, cash-flow mitigation, 504 interim financing, start-up working capital and nonprofit financing.