Frequently Asked Questions

What types of businesses are eligible for a Washington Small Business Flex Fund 2 loan?

To be eligible for a Flex Fund loan, a small business must meet the requirements detailed below. Please note that the pre-application should be completed and submitted by the owner of the business with the largest ownership interest, and that all owners with more than 20% ownership will be required to attest to the information provided.

The following criteria is the minimum required for a business or nonprofit to be considered eligible for a loan under this program:

  • The business or nonprofit must employ 50 or fewer employees;
  • Have been in operation for at least one year prior to the date of application
  • Have less than $5 million in gross annual revenue
  • Demonstrate ability to repay the loan through previous and projected cash flow
  • Have existing operations in Washington state

How is this program different from other loan funds?

The Washington Small Business Flex Fund 2 has a network of community-based lenders with decades of experience helping Washington’s small businesses and nonprofits from underserved and underbanked communities. These community lenders can assist you through every step of the loan process. The Small Business Flex Fund 2 also aims to reduce barriers to financial resources by removing credit score or specific collateral requirements and origination fees charged outside of closing costs. Funds can be spent flexibly based on your business’s needs and goals.

Do I need collateral?

No specific collateral is required to be eligible. You do not need to have access to any specific real estate or equipment. However, a blanket first or second lien will be filed on business assets, and your lender may request additional, specific collateral. Personal guarantees will be required for individuals who own 20% or more of a business.

Does my business need to be based in Washington to apply?

Yes, the main office or business location primarily benefiting from the loan must be located in Washington, and the intended use of proceeds must be used in Washington.

Who are the local, community-based lenders?

What makes the Washington Small Business Flex Fund 2 truly unique is the network of nonprofit, community-based lenders. For more than 40 years, these Community Development Financial Institutions (CDFIs) have been dedicated to helping local small businesses and nonprofits thrive. CDFIs exist to meet the unique needs of historically underbanked communities and have years of experience lending to borrowers in these communities.

Why does the application ask about my personal background?

The funding provided through the Washington Small Business Flex Fund 2 is intended to strengthen communities and the small business and nonprofits that help them thrive. The voluntary background information provided by applicants helps us ensure that the program is reaching small, local businesses who most need the funding.

What if I need help with the loan application?

When you visit, you will be connected to a local, community-based lender who can assist with every step of the application and direct you to additional support services.

What are the loan terms?

Borrow up to $250,000
Rates at 1-4% above WSJ Prime rate — as of July 27, 2023, rates range from 9.5-12.5% depending on the length of the loan
Fixed interest rate for the life of the loan
No prepayment penalties

What can I use the loan for?

Washington Small Business Flex Fund 2 loans can be used for a full range of business needs including:

  • Payroll
  • Rent and utilities
  • Building improvements
  • Marketing and advertising
  • Supplies and other business expenses

Loans may not be used for:

  • Passive real estate investments
  • Lobby activities,
  • Engaging in securities trading
  • Activities that are prohibited by Federal or Washington state law, or certain other prohibited activities.

You will be required to detail the proposed use of loan proceeds when you apply to the community lender.

If I match with a program lender, will I receive a loan?

Due to a limited amount of funding availability and the high volume of applications expected, it is anticipated that not all applicants will be able to receive a loan. Further, please note that submitting an application is not an indication of eligibility and does not mean that a loan will be approved or funded. More information will be requested in your application with your lender to determine your loan eligibility. The time it takes to process an application will depend on the volume of applications received by the matched community lender.

What information will be required to apply for a loan from the Washington Small Business Flex Fund 2?

As part of your full loan application, you will need to provide the following documentation to the community lender:

  • Two most recently filed tax returns, if available and required by the lender;
  • Bank statements and/or internally generated financial statements;
  • Information regarding business owner(s) with more than 20% ownership, including name, address, SSN, EIN or ITIN, phone number, email, percentage ownership, and photo ID;
  • Executed Attestation Form (to be provided by the community lender);
  • Evidence of legal formation of business or nonprofit entity (e.g., articles of incorporation and bylaws);
  • Personal guarantee (for businesses only); and
  • Other documentation required by the community lender at or after the time of the application

A participating community lender will reach out to you to collect the required documentation, conduct any credit checks and finalize the application review process.

What types of businesses are not eligible for a loan?

Ineligible businesses are:

  • Cannabis businesses or firms engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located;
  • Passive real estate investments or the purchase of securities
  • Firms engaged in lobbying activities or pyramid sales schemes
  • Facilities primarily used for gambling or to facilitate gambling
  • Businesses engaged in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade, such as commodity futures trading or passive real estate investing
  • Businesses that earn more than half of their annual net revenue from lending activities, except for Community Development Financial Institutions and Tribal enterprises that are not depository institutions or bank holding companies
  • Businesses seeking to repay delinquent federal or state income taxes, unless the small business borrower has a payment plan in place with the relevant taxing authority

Is a Washington Small Business Flex Fund 2 loan forgivable?

The Flex Fund is NOT a forgivable loan or grant program. The borrower will need to pay back the full amount of the loan with interest over 3-6 years, depending on the loan.

What happens if I miss a payment?

If you do not make a loan payment on time, you may be assessed a late fee at the discretion of the community-based lender. A failure to pay may result in the loan being declared in default. During the loan application process, your community-based lender will discuss the full terms of your loan agreement to ensure you understand the details regarding late payment and default.

Does completing a pre-application guarantee that I’ll match with a program lender?

No. While the program has adopted minimum eligibility criteria that are required to apply (for example, at least one year of operations, fewer than 50 employees, less than $5 million in annual revenues), the participating community lenders also apply their own lending criteria. An applicant that fails to meet the criteria set by the lenders will not receive a match and will be encouraged to consult with the state’s network of business support organizations. The program seeks a diverse group of participating lenders who offer the broadest possible coverage across geographies, industries, and other factors to achieve the highest possible match rate with program applicants.