Small Business Linked Investments Program

Small Business Linked Investments Program

Borrowers:

To be considered for Linked Investments for Tomorrow (LIFT), a borrower must meet the following qualifications:

1. The combined net worth of the borrowers and owners of the business cannot exceed $975,000.
2. Existing small businesses must have annual gross sales of $2 million or less at the time of application.
3. The maximum amount of assistance a borrower or business may receive is $200,000.
4. The loan may be used for the purchase of land, improvements, fixtures, machinery, inventory, supplies, equipment, information technology, licenses, patents, trademarks or copyright fees and expenses.
5. Loan proceeds cannot be used to finance existing debt.
6. The business must be for-profit.
7. The borrower must not have received financial assistance from the LIFT program prior to July 1, 2006.
8. Home businesses must qualify for a tax deduction for the portion of the home used for business pursuant to regulations of the Internal Revenue Service.
9. Loan proceeds cannot be used for real estate investments, rental, leasing or speculation.
10. Liquor, beer and wine sales must not exceed 20% of annual sales for establishments holding a class "C" liquor license.
11. Borrowers cannot be delinquent in making child support payments or any other payments due the State.

Lenders:

A lender is an "eligible lending institution" as defined in Iowa Code section 12.32 and includes banks, savings and loans, converted savings banks and credit unions that are located in Iowa and are in compliance with Iowa Code chapter 12C.

View our Lender Instructions.

Small Business Linked Investments Program

In order to participate in Linked Investments for Tomorrow (LIFT), a lender's home office must complete and submit a signed LIFT Master Agreement. This form is available by signing up as a lender and completing the required information. Once the bank information is entered, the lender must print off the LIFT Master Agreement and submit a signed copy to the State Treasurer. By filing this form, the home office agrees that it and all its branches, when participating in the LIFT program, will comply with Iowa Code sections 12.31-12.43, Iowa Code chapter 12C, and Iowa Administrative Code 781 - Chapters 4, 13 and 14.

The following steps will take place when participating in LIFT:

1. Small business borrowers must contact their financial institution and complete the normal lending process. The lender may approve a loan for any amount or any duration, but LIFT will only provide up to $200,000, which may be renewed for up to five years through the LIFT program.
2. The lender will complete an online application for the small business borrower and must submit the certificate of compliance, signed by both the borrower and lending officer.

If the application meets the LIFT guidelines, the State Treasurer's Office will approve the online application.

3. The State Treasurer will place a certificate of deposit (CD) in the financial institution on the 15th day of the month or the following business day. The lender must make all funds available to the borrower by the end of the business day following the day the lender receives the funds from the State Treasurer.
4. The LIFT CD will be in the name of "Treasurer State of Iowa." The interest will be set to pay simple interest at maturity, based on the actual number of days over a 365-day basis. During a leap year, it will be calculated on the actual number of days over a 366-day basis.
5. The lender will hold the original CD at the financial institution and mail a safekeeping receipt or a copy of the CD to the State Treasurer. If possible, the lender will retain the same CD number during the life of the LIFT loan. The safekeeping receipt or photocopy must include:
   1. CD number
   2. Rate
   3. Amount
   4. Terms
   5. Maturity date.
6. The State Treasurer cannot accept a collateral receipt. The State Treasurer does not sign penalty notices and does not sign a financial institution's terms and conditions. The CD is not collateral or security for the loan.
7. At maturity of the CD, the lender must enter the payment amount online and remit interest earned on the CD, as well as any principal received from the borrower. Send either a wire or ACH file (do not send a check) for principal and interest. The State Treasurer's Office will fax you a maturity notice with wire and ACH instructions.
8. At renewal, the lender is required to submit a renewal application to ensure the borrower and business continue eligibility for participation in the LIFT program. The lender must also submit a safekeeping receipt or photocopy of the CD. If the CD is not renewed within 10 days after the maturity date, the lender will remit the CD balance and accrued interest.

At any time after approval of the application, the lender will notify the State Treasurer in writing if the loan is paid off, if the loan is in default, if the business closes or if the business is sold. The lender will, within 10 business days, remit the principal balance of the CD and the accrued interest to the State Treasurer.

If at any point in time it is determined that a borrower or business does not meet the requirements of participation in the LIFT program, the State Treasurer's Office will notify the lender and withdraw the CD with no penalty.

Small Business Linked Investments Program

FAQs

What is the taxpayer ID number I use to set up the certificate of deposit (CD)?
Use the State of Iowa's tax ID number 42-6004579.

The qualifications declare loan proceeds can be used for land or buildings, but then states 'Loan proceeds cannot be used for real estate investments, rental, leasing or speculation'. Please explain.
Proceeds can be used for land or property only if that property will be used by the business. Buying property to rent out or for speculation purposes is disqualified.

Can this money be used for a line of credit?
No. According to the program rules, all of the proceeds must be in the hands of the borrower by the business day following the day the CD is funded.

The CD is only funded on the 15 of the month, but I need to close the loan sooner. How can I do this?
Program rules do allow you to set up a short-term bridge loan in anticipation of LIFT funds, which can be refinanced with the proceeds. The LIFT application should be approved prior to setting up the bridge loan so you are assured the borrower qualifies and funds are available.

Can the LIFT program be used in conjunction with the Small Business Administration (SBA)?
Yes. Our program is not associated with SBA. As long as our requirements are met, it is allowed. However, please check with the SBA to verify all of its requirements are met as well.

Are LIFT loan CDs considered public funds for reporting purposes?
Yes.

Is a borrower allowed to have multiple LIFT loans?
No. The borrower is limited to one loan from one financial institution. However, a borrower or business can have multiple LIFT CDs under one loan as long as it is within five years and the total of the CDs is $200,000.00 or less. Because this may create difficulty, we do not recommend it. If you would like to use the program this way, here is an example of how it could work:

1. CD funded for LIFT loan for $10,000.00 in July 2008.
2. Borrower reapplies and receives another CD (at the same financial institution) for $10,000.00 in June 2010.
3. Loan is now for $20,000.00 and both CDs must be paid off by July 2013, which is the program end date for this borrower.
4. Each CD is set up on its own one-year maturity/renewal schedule. A renewal application must be submitted for each CD each year after opening. All interest and principal remitted on the loan must be paid off at the CD maturity.
5. Since CD rates are set monthly, it would be conceivable to have varying rates on the multiple CDs associated with the one loan. In this case the loan rate could never exceed four percent above the lowest CD rate.

How much money is available for the program?
Approximately $108 million is allocated for the program, and is subject to change at the Treasurer's discretion. One half of that amount is available for qualifying small businesses that are 51% or more owned by women, minority persons, veterans or persons with disabilities.