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.