Community Development Block Grant Float
Loans Project Qualifications

Community Development Block Grant (CDBG) Float Loans are available to businesses from the Washington State Office of Trade and Economic Development (OTED) through cities and counties which are eligible to receive Washington State Small Cities Community Development Block Grant Program assistance.

An eligible city or county may apply for a grant under this program in order to extend a short-term loan to a private business entity under the following conditions:

• The business must demonstrate that public financing of
  the project is appropriate to create or retain jobs.
• The business must provide an unconditional, irrevocable Letter
  of Credit in U.S. dollars in the full amount of the principal and
  interest due, as collateral for the loan.
• The business must agree to create jobs and make
  the majority of them available to qualified lower income
  candidates.  Retention of jobs can also be considered
  as a qualifying factor.
• The business must agree to enter into an agreement
  with OTED and the local job service center to obtain
  referrals of qualified job candidates.
• The business must agree to comply with all applicable
  federal, state, and local laws and regulations.

Terms of the Grant/Loan

• Interest paid quarterly, and principal balance will be due at
  maturity or on demand, whichever occurs first.  Loan
  terms are limited to 30 months maximum.
• The interest rate on the Float Loan will be negotiated based
  on the contribution the project will make to job creation or
  retention, but will typically be at or below prime.

Note:  Funds extended under the CDBG Float Loan Program are already committed to other jurisdictions that anticipate using the funds when the loan matures.  While OTED structures a Float Loan with every expectation that the loan will not be called prior to maturity, there is a possibility that the loan may be called early to honor the original commitment.