Fund your Alaska business

When your own money is not enough, start with a no-cost advisor, then read which program actually lends. The Division of Investments can lend to the business. AIDEA buys part of a loan a bank has already agreed to make. Regular SBA loans come from a lender.

What’s different in Alaska

• One-on-one advising is no-cost. The Alaska SBDC offers one-on-one, no-cost confidential counseling¹. Make an appointment.
• Two state loan programs do not start at a bank. The microloan is direct, up to $35,000³. The small business economic development loan is generally up to $750,000⁵, mostly in smaller communities. A larger microloan, and sometimes the development loan, still asks for a lender’s letter.
• AIDEA is the bank’s partner, not your first application. The loan must be sponsored and originated by a financial institution that can participate. You apply through that institution, not by sending AIDEA the package yourself.⁶
• The named grant is narrow. It is for Alaska Mental Health Trust beneficiaries, not a check for every opening day.
• One SBA office covers the whole state. It is in Anchorage and covers the entire state of Alaska, all 19 organized boroughs and 11 census areas⁹.

Do this

1. Write down what you need and what it is for. Equipment, inventory, construction, and rent are different asks. The microloan allows working capital, equipment, construction, or other commercial purposes. Costs from more than six months before the application are not allowed.³
2. Book no-cost advising. The Alaska SBDC FAQ says the network offers one-on-one, no-cost confidential counseling. The same sentence calls workshops low-cost¹, and the page does not price them.* Ask the center what a class costs before you sign up. The SBDC is hosted at the University of Alaska Anchorage and funded in part by the SBA.
3. Use the SBA office for the state. The Alaska District Office in Anchorage covers the entire state of Alaska, all 19 organized boroughs and 11 census areas⁹. There is not a second district office for part of the state.
4. Understand who lends the regular SBA loans. The SBDC’s FAQ says the SBA is not a direct lender, except for disaster loans. It guarantees loans that lenders make.¹ The SBA loans guide explains who makes each kind.
5. Read the Division of Investments microloan before you assume a bank has to be involved. The microloan page lends up to $35,000 to one person, or $70,000 to two or more. The term is twelve years. You must be an Alaska resident for the 12 months before the application, for a business located in Alaska. A request over $35,000 needs a lender's denial letter, or confirmation that a bank loan depends on this loan. The application package lists a $100 application fee and a 1%³ origination fee due at closing. Child support has to be current. The loan has to be secured, and it cannot exceed the value of the collateral.
6. Read the development loan the same way. The small business economic development page says the maximum is generally $750,000. It is for communities under 30,000 people. Larger communities are available on a limited basis, depending on funds. The interest rate is a fixed rate generally below 6 percent. The application fee is $250, credited toward the origination fee if the loan is approved. Origination is 1 percent of the loan at closing, with a $100 minimum. Applicants may be required to supply a lender's turn-down letter, or a letter explaining why the bank will not finance the whole project⁵. The business generally has to meet the SBA’s small-business size rules as the page describes them, and funding is limited. Call about funds before you apply. The page says “generally” on the amount, the rate, and the term. Those are not promises.
7. Use AIDEA when a bank is already in the deal. The loan participation page says AIDEA can purchase up to 90 percent of a participating credit, to a maximum of $25 million. The loan must be sponsored and originated by a financial institution that can participate. You apply through that institution, not by sending AIDEA the package yourself. Terms are up to 15 years for personal property or 25 years for real property, with a maximum loan-to-value of 75 percent. The application fee is $1,100⁶, paid when the bank sends the package, and it is credited toward a one percent commitment fee if you accept a commitment. The project has to be in Alaska. You contact an eligible financial institution first.
8. Look at the rural fund only if the community qualifies. AIDEA’s RDIF page is for a community of 5,000 or fewer that is not connected by road or rail to Anchorage or Fairbanks, or 2,000 or fewer if it is connected. The maximum is $150,000 to one person, or $300,000⁷ to two or more people, for up to 25 years, at a rate of 1 percent below prime. The loan has to create or keep jobs in that community. The page points you to the Division of Investments’ RDIF page for the program. Read it before you apply.
9. Read the grant page before you treat it as startup cash. The microenterprise grant is for people with disabilities and their families who qualify as Alaska Mental Health Trust beneficiaries. The business must be a microenterprise: one that needs no more than $35,000 to operate and has four employees or fewer. Amounts are from $500 to $10,000, with a lifetime limit of $10,000. The money can pay for starting a business, making a current business larger, or buying an existing business⁸. It is not a grant for every new business. Be wary of anyone selling access to a guaranteed grant.
10. Keep your paperwork ready. Lenders and the division ask for formation documents and an EIN. Register your business and Get your tax IDs are the Alaska versions.
11. After a declared disaster, the SBA can lend directly. Disaster assistance covers several kinds of loan, including physical damage, economic injury, and military reservist economic injury, for a declared disaster, and only if you qualify¹⁰. A disaster by itself does not qualify you. Check the declaration and the loan type before you apply.

What you get back

An appointment with an advisor, and help preparing what a lender or the Division of Investments asks for. A loan decision comes only if you qualify, from the division on a direct program or from a lender on AIDEA’s participation loan. A grant decision comes only if you are in the group the grant page names. These pages do not promise a finished plan or an approval.