Mississippi Loan
Guaranty Program
The Mississippi
Loan Guaranty Program, administered by the Mississippi Business
Finance Corporation ("MBFC")
acting on behalf of the State of Mississippi, strengthens and
builds the small business concept in the State of Mississippi
("State") by enabling small businesses to obtain term
financing through the use of loan guarantees. As a result of
the loan guarantee protection, lending institutions are more
likely to provide financing not otherwise available to small
businesses by substantially reducing their exposure in the event
of defaults.
ELIGIBILITY
The business must be located in the State. The business may
be a sole proprietorship, partnership, corporation or limited
liability company. The applicant must provide information that
reflects the business is, or has the potential of, operating
profitably. The business owners must have equity in the project
for which financing is being requested. Lenders must be authorized
to do business in the State.
USE OF PROCEEDS
The Loan Guaranty Program may be used to finance all project
costs associated with the establishment and/or expansion of a
small business, including fixed assets, working capital, start-up
costs, interest expense during construction, and professional
fees relating to the project.
LOAN AMOUNTS AND TERMS
The MBFC maximum guarantee is 75% of the bank's loss in the
event of a default or $375,000, whichever is less.
Loans may have a maturity of up to 20 years, with the interest
rates established by the lender. All loan servicing is handled
by the lender, including closing, collection, and liquidation
in the event of a default.
The lender will require the necessary collateral to reasonably
secure the loan. No loan to be guaranteed by MBFC can exceed
90% of the fair market value of the collateral pledged. The lender
must appraise the collateral and submit a copy of the appraisal
with the loan guaranty application. Insurance will be required
on all loans guaranteed by MBFC and shall include, hazard insurance
to cover all collateral, general liability insurance, workers'
compensation insurance (if required by State statute), and life
insurance on the borrower and/or guarantors assigned to the bank
for the amount of the loan.
RESTRICTIONS
Loan guarantees are not available under the following circumstances:
- If the proceeds would be used
to pay off existing debt for consolidation purposes;
- If the assistance would provide or replenish funds to owners,
partners, or stockholders of the business which would not change
the ownership interest of the business;
- If the loan would provide, or free funds for speculation in any
kind of property or finance, the acquisition, construction, improvement,
or operation of real property, which is to be held primarily
for the sale or investment;
- If the business is a form of media, through, which editorial
opinions are expressed; and
- If the business is engaged in direct or indirect lending.
APPLICATION PROCESS
Application forms are available from MBFC and will be provided
to lenders upon request. At a minimum the following information
is required. The applicant should contact the lender prior to
the preparation of this data to determine the proper format.
Click Here - to - Download Application
Existing business to Provide:
- Description and history of
the business;
- Total project costs with a breakdown of the sources and uses
of funds;
- Financial statements, to include balance sheets and income statements,
for the three (3) preceding fiscal years and current financial
statements dated within ninety (90) days of the application;
- Projected balance sheets, income statements, and statements of
cash flow for the two (2) year period following loan funding;
- List of collateral available to secure the loan with an estimated
fair market value for each item;
- Current personal financial statement on each principal owning
20% or more of the business; and
- Resumes of owners and key management personnel.
New Business to Provide:
- Business plan, feasibility
study, or similar information describing the proposed business
and its potential for success;
- Total project costs with a breakdown of the sources and uses
of funds;
- Projected balance sheet, income statements, and statement of
cash flow for the two (2) year period following the opening of
the business;
- List of collateral available to secure the loan with and estimated
fair market value for each item;
- Current personal financial statement on each principal owning
20% or more of the business; and
- Resumes of owners and key management personnel.
FEES
There is a one time, non-refundable fee of 2% of the guaranteed
portion of the loan. This fee is paid to MBFC at the time the
permanent loan is closed and may be paid from proceeds.
