What is gap financing?
For business start-up and expansion projects, Initiative Foundation business financing programs meet the gap between the financing a local lender is able to provide and the cash equity the owner is able to contribute. The amount lenders are able to provide to small businesses is limited because they must comply with strict government regulations including collateral requirements, past business financial performance, and the owners personal credit history. Business owners in the start-up or growth stage of a venture often have invested all they can afford and more and need available equity to support operating cash needs. Initiative Foundation business financing programs meet the gap by taking a subordinate or risky collateral position behind the local lender or by providing loan guaranties.
