Hartford Community Loan Fund-Business Loans

Commercial Loan Program

Eligible Investment Area: City of Hartford

HCLF makes loans of up to $1,000,000 to businesses in its Investment Area. Since 1997, HCLF has helped provide over $15 million in loans to more than 60 southend businesses through its unique Participation Program, partnering HCLF’s funds with capital from local commercial banks. HCLF also provides micro loans of up to $50,000 directly to business borrowers.

Through the Participation Program, HCLF staff will identify one of our local bank partners who may be willing to help fund at least a portion of the loan request. Sometimes an applicant’s available collateral, cashflow, or credit history is inadequate for the bank to fully fund the request, so HCLF offers its own capital to supplement the bank’s in order to ‘round out’ financing for a local business. HCLF’s bank partner originates one loan to the borrower, with HCLF providing the bank its portion of the loan amount at closing. HCLF’s participation in the loan is subordinate to the bank’s interest. HCLF can structure its portion of the loan with much more flexible terms, thus enabling a borrower to obtain a loan it couldn't if it relied exclusively on the bank.

HCLF’s products provide banks with capital to complete business loans above an amount the bank would be willing to provide on its own, due to either business cash flow, collateral, or credit history considerations. HCLF loan products essentially provide its partner banks with their own ‘soft equity’ product, increasing the bank’s toolbox of options when lending to Hartford businesses.

To be eligible for an HCLF loan, a small business must meet all of the following criteria:

Principal place of business or significant operations in HCLF Investment Area, or area so designated by HCLF, at time of application or upon disbursement of proceeds (see HCLF Investment Area description)

Operating for minimum of 12 months.

Legal entity authorized to conduct business in State of Connecticut.

Engaged in legal, non-speculative business operating in industrial, commercial, agricultural, retail, or service form of business, or any combination of the foregoing.

Proceeds to be used for general operating expenditures, capital expenditures, leasehold improvements, or the acquisition or refinancing of any business-occupied real estate.

Refinancing of business loans may be considered with prior approval of HCLF. Proceeds of new loan must benefit company by either improving cash flow and/or providing additional cash proceeds.

With a ten year track record, an HCLF participation in a bank-originated loan is viewed by bank examiners as a loan enhancement product similar to those offered by the SBA or Connecticut Development Authority. However, HCLF doesn’t charge additional fees usually passed on to the borrower for obtaining such an enhancement. Consequently HCLF is an attractive partner for banks seeking credit under requirements of the Community Reinvestment Act, which encourages lending to borrowers in low-moderate income census.