The Office of Small and Disadvantaged Businesses Utilization (OSDBU) Financial Assistance Division has the Short-Term Lending Program (STLP) to help small businesses gain access to the capital they need to participate in transportation-related contracts. STLP provides certified Disadvantaged Business Enterprises (DBE) and other certified small businesses short term working capital financing at competitive interest rates for Department of Transportation (DOT) or DOT funded contracts and subcontracts.
How It Works: The line of credit is for account receivable financing to support the work being performed on eligible transportation related contracts.
Lines of credit are managed by OSDBU through cooperative agreements between DOT and Participating Lenders (PLs).
The interest rate of the loan is a variable rate tied to the Wall Street Journal Prime Interest Rate.
The applicant submits an application fee of $150 to the Participating Lender along with a complete application.
Technical Assistance in filling out the application is provided by the Small Business Transportation Resource Centers. The centers can be found on http://www.osdbu.dot.gov/regional/index.cfm.
The funds are borrowed and advanced to the borrower against each invoice of the contract(s) being financed - up to 85 percent of the invoice total. Each invoice is paid directly to the Participating Lenders (otherwise referred to as "assignment of funds") by the Project Owner or Prime Contractor with a two-party check addressed to the Lender and the Borrower. The borrower re-pays the principal and interest, and the bank releases the balance to the borrower.
Prohibited Use of Funds: The loan guarantee may not be used for:
- Contract mobilization
- Equipment purchases or other long term uses
- Refinancing of existing debt
- Payment of taxes
- Distribution to investors or stock holders