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Working Capital Loan Guaranty for Manufacturers

MassDevelopment’s newest guaranty product allows banks to make larger working capital loans to manufacturing companies than they would normally make under their existing advance rates.

Eligible borrowers are manufacturers that conduct their primary operations in Massachusetts. A fixed guaranty to the lender of up to $1 million will cover advances up to 25% above the lender’s maximum allowable advance rate under its current formula. The guaranty terminates with the maturity of the line of credit and will be considered for renewal on the same cycle as the bank, but no less frequently than every three years.

Term working capital loans may also be guaranteed in a fixed amount equal to no more than 25% of the bank’s loan amount. The guarantee amortizes dollar-for-dollar with the underlying term loan for up to five years. MassDevelopment charges an annual fee equal to 1% of the guaranty amount as long as the guaranty is outstanding.


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