Applying for a Mini-Bond Online

A mini bond is a financial item similar to a regular bond that is offered by local, state, and federal government agencies to help with small business finance. There are a few different types of mini bonds that all can be very useful for small businesses. Mini-bonds offer tax exemption to the businesses, part of why they are an attractive alternative finance option.

The rules surrounding the mini bond will vary depending on the issuing agent. Different locations will have their own requirements and regulations regarding the issuance of those bonds. In order to qualify for a mini bond, the business must be a manufacturer or have a 501(c)(3) organization status. The bonds can be used for financing from half a million up to 2 million dollars. They are usually 1 to 2% cheaper to borrow against than a traditional business loan, and considered a relatively safe investment as they are backed by the issuing governmental agency.

Prequalification

Some issuers will offer a prequalification survey that will prequalify applicants to receive a mini bond. The prequalification will also work to ensure that the funds from the bond will be used for a suitable business purpose. When a borrower has been determined as eligible, the issuer will work with them to setup terms that work well for them and the business.

Application

After a business entity has been qualified to receive the mini bond, an application must be completed with appropriate documentation to show the financial aspect of the business including how much money it makes, how much money it needs, what it is needed for, and why it is needed. At this point in time, each issuer has different requirements for their specific mini bonds, and therefore online applications may not always be available.

Approval

When the mini bond application is approved (in a stage called "closing"), the state agency will place the funds into escrow. These funds will remain in escrow for use as the business needs them. The business can continue to use the funds for whatever business expenses they incur, until repayment begins as designated in the terms set forth before and during the application process.

Consider talking to different local, state, and federal agencies to determine if min bonds are available in your area. If you find they are available, get a list of issuers so you can contact each of them to find out more about their specific requirements. If you meet any requirements, consider applying for the bonds as a means of financing for your business.