Small Business Stabilization Loan Program
The Los Angeles County Development Authority has launched an affordable and flexible business loan program to support and help stabilize businesses in the region. Small Business Stabilization Loans range from $50,000 to $3 million, and can be used for working capital, equipment purchases, inventory, or refinancing of existing loans at higher interest rates.
Business Eligibility
- Businesses must have a physical location within Los Angeles County.
- Businesses must have been in operation for a minimum of two years at time of application.
- Click here for a list of ineligible businesses.
Interest rate:
Fixed Wall Street Journal Prime rate. (Currently at 3.25%)
Loan Term:
Working Capital - 5-7 years.
Equipment - Up to 10 years.
Real Estate Acquisition and Construction - Up to 20 years.
Step 1
Attend an “Applying for An Affordable & Flexible LACDA Loan” webinar to learn more about the requirements of application process and documentation needed.
Step 2
Upon completion of the webinar, click here to submit request for a one-on-one counseling session.
Step 3
Borrower is referred to a Technical Assistance Provider. Borrower will be contacted to set up a one-on-one counseling session appointment.
Loan Details
Amount:
Minimum $50,000. Maximum $3,000,000.
Interest rate:
Fixed Wall Street Journal Prime rate. (Currently at 3.25%)
Loan Term:
Working Capital - 5-7 years.
Equipment - Up to 10 years.
Real Estate Acquisition and Construction - Up to 20 years.
Repayment:
Loan payments deferred for first 12 months for non-guaranteed loans. Interest will accrue. Payments
will be due and payable starting on the 13th month after the funding date.
Loans guaranteed by the Disaster Relief Loan Guarantee Program are subject to interest-only payments
for the first 12 months; principal and interest payments will begin on the 13th month after the funding
date.
No prepayment penalty.
Uniform Commercial Code Filing: Required
Origination Fees:
None for loans under $100,000.
1.5% for loans above $100,000.
2.5% of loan amount plus $250 for document processing fee for loans guaranteed under the Disaster
Relief Loan Guarantee Program.
Job Creation:
A minimum of one full-time equivalent job must be retained or created per $75,000 of loan
assistance.
Business and Owner Requirements
Good Standing:
Business must have an “active” status with the Secretary of State.
Click here to check your status.
Credit Check:
A hard pull credit report is required. Borrower must show good credit management with a minimum FICO score of 620.
COVID-19 Impact Statement:
Borrower must provide a hardship statement with an explanation of what has been done to address the COVID-19 impact on the business (i.e. pivot, online sales, etc.) and how loan funds will address the COVID-19 impact.
Financial Stability:
Borrower must provide tax returns for prior two years showing stable income, as well as financial statements for 2020 and financial projections for 2021 and 2022.
Ability to Repay:
Ability to repay the loan will be calculated using earnings before taxes, interest, depreciation and amortization from the businesses' last full fiscal year financial documentation provided by Borrower.
Guarantees:
Guarantees are required for all owners with 20% or greater ownership interest. For entities with multiple owners with less than 20% ownership, the managing member or key employee/manager must provide the guarantee. The LACDA may require additional owners to guarantee the loan regardless of ownership interest. Spouses of married borrowers will be required to also sign guarantee.
Uses of Funds
Eligible Uses
- Working Capital
- Equipment
- Inventory
- Real Estate Acquisition
- Refinancing of existing loans (loans to be refinanced must be current)
Click here for the list of ineligible uses of funds for the Small Business Stabilization Loan.
Other Requirements
Davis-Bacon and Related Acts:
Borrower shall be responsible for payment of all labor compliance and construction inspection costs
borne by the LACDA. The LACDA requires all contractors to have prior experience working on projects
subject to Davis-Bacon and Related Acts.
Appraisals or Automated Valuation Models:
Borrower shall bear the cost of the appraisal or automated valuation model requested by the LACDA for
all transactions involving real estate to be financed or used as collateral.
Environmental Review:
All loans will be reviewed for compliance with the National Environmental Policy Act. All real estate
transaction will require a Phase I and, if needed, a Phase II report. Financing of real estate
acquisition or construction of businesses located within 500 feet of a freeway is strictly prohibited.
Borrower shall bear the costs for Phase I and Phase II reports, including environmental compliance.
Collateral
Collateral is required for:
- The purchase of equipment under $100,000. A lien is placed on equipment purchased.
- All loans guaranteed under the Disaster Relief Loan Guarantee Program as outlined below.
- All loans above $100,000. Minimum collateral coverage must be 70% subject to review on a case-by-case basis. Collateral coverage will be determined by dividing available collateral by the loan amount.
Collateral Value:
Available collateral will be determined by taking a liquidation value of each asset pledged as collateral, based on the liquidation percentage in the matrix below, then subtracting any preceding liens.
| Type of Collateral | Liquidation % | How value is determined. |
|---|---|---|
| Cash Surrender Value of Life Insurance | 90% | |
| Commercial Real Estate | 75% | Based on appraisal minus preceding liens. |
| Single Family Residence | 80% | Based on appraisal or Assessed Valuation Model (AVM) minus preceding liens. |
| Equipment – New | 75% | Based on purchase price. |
| Equipment – Used | 50% | Based on book value minus preceding liens. |
| Trading assets (A/R and Inventory) | 20% | Based on book value minus preceding liens. |
| Cash Surrender Value of Life Insurance | 90% |
What You Need To Know
Good Faith Deposit
All loans above $100,000 will require a good faith deposit to cover all third-party costs.
Application Limit
Only one application per legal entity will be considered for this loan program.
Loan Committee Review
All loans above $250,000 shall be subject to review and approval by the LACDA Loan Committee.
Disclaimer
The LACDA may revise these guidelines as needed to ensure Program goals and requirements are met successfully.
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