Small businesses in Washington state face significant challenges when it comes to purchasing commercial real estate, often hindering their potential for expansion and economic contribution. To tackle this problem, the Washington Department of Commerce is now administering a groundbreaking $26 million program over the next seven years. This initiative specifically aims to empower small businesses owned by socially and economically disadvantaged individuals by offering low-interest loans, making property purchases more accessible and financially feasible.
Heritage Bank’s Role and Loan Mechanics
Heritage Bank Steps In
Heritage Bank has been entrusted with operating this new loan program, marking its commitment to supporting small businesses in Washington. They issued their first loan under this program in August, setting a precedent for future applicants. The program stands out by offering two types of loans: standard companion loans at below-market interest rates and an additional loan that covers up to 9% of project costs at an impressively low 1% interest rate. Remarkably, this additional loan can be forgiven after ten years. Paul Dini, a commercial banking regional manager at Heritage Bank, emphasized that such funding allows businesses to conserve significant capital for other essential uses, whether that be hiring new staff or purchasing new equipment.
Eligibility and Scope
To qualify for these loans, businesses must have fewer than 750 employees and be based in Washington. The program is designed to accommodate project sizes up to $20 million, making it a versatile option for a wide range of businesses. According to the U.S. Small Business Administration, Washington hosted approximately 657,000 small businesses in 2022, encompassing various sectors such as professional services, real estate, and transportation. The average loan request under this program has been about $275,000, with companion loans typically around $2.3 million. However, requests have varied widely, from as low as $39,000 to as much as $1.2 million. Most queries have come from Western Washington, with the first approved loan benefiting a machine shop in Mason County.
Town Halls and Funding Sources
Information and Outreach Efforts
To ensure that small businesses across the state are well-informed about this new financial opportunity, Heritage Bank and the Department of Commerce have conducted town halls in various locations statewide. This proactive outreach ensures a comprehensive understanding and participation in the program. These town halls serve as crucial platforms for disseminating information and answering any questions prospective applicants may have, thereby facilitating smoother application processes. Small business owners are encouraged to seize this chance to enhance their operational capabilities by securing property, thereby setting the foundation for future growth and stability.
Funding Origins and Broader Initiatives
Small businesses in Washington state face considerable obstacles when striving to purchase commercial real estate, frequently impeding their potential for growth and economic impact. To address this issue, the Washington Department of Commerce has launched an innovative $26 million program scheduled to run over the next seven years. This initiative is deliberately designed to support small businesses owned by socially and economically disadvantaged individuals. The program will provide low-interest loans to make property purchases more accessible and financially manageable. This financial assistance aims to eliminate the barriers that often prevent these businesses from securing the real estate necessary for expansion. By offering these favorable loan terms, the program not only helps individual businesses grow but also stimulates broader economic development within the community. The initiative reflects a commitment to inclusivity and economic diversity, ensuring that more entrepreneurs have the opportunity to thrive and contribute to the region’s economy.
