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Microenterprise Loan Program


The City of Federal Way currently offers three programs that use CDBG funds to directly assist local businesses: Small Business Loan Program, Microenterprise Loan Program, and the Commercial Business Exterior Improvement Program. The Community Development Block Grant (CDBG) program is sponsored by the U.S. Department of Housing and Urban Development (HUD) and it is administered locally through the City of Federal Way.

The Microenterprise Program loans $5,000 to $25,000 for startup costs and working capital to grow business and equipment. The program's goals are to:

  • Help entrepreneurs and small businesses start up and/or grow sucessfully.
  • Create new jobs.
  • Increase opportunities ofr low- and moderate-income persons.
  • Expand opportunities for minority- and women-owned businesses.

The City of Federal Way Council has designated the City of Federal Way CDBG Loan Review Advisory Committee (LRAC) as responsible for the review of all CDBG Loan Fund requests. Funding decisions relative to all CDBG loans shall be made by the City Council upon a recommendation by the LRAC and the Mayor. All project funding is on a first-come, first-served basis while program funding is available. The City Council makes decisions annually to re-capitalize CDBG program funding.

Fill out the online application to apply for a CDBG Microenterprise Loan.

For further information, contact Community Services Manager Jeff Watson at (253) 835-2650, or jeff.watson@cityoffederalway.com

Loan Size
$5,000 up to $25,000


Amortization periods that exceed the loan term may be provided where appropriate.

Between 2 to 5 years

Interest Rate
Prime + 3% (depending on credit quality and collateral)

Prepayment Penalties

Business assets (personal assests may be required depending on collateral).
Owners with more than 20% share must provide personal guarantee.


  • Fees may be added to the principal amount of the loan and included in CDBG loan funds.
  • Application Fee: $150.00
  • Loan Origination Fee: $150.00, or 0.25% of the loan amount, whichever is greater
  • Closing: 50% of the legal fees and costs incurred by the city for the CDBG loan closing

CDBG Requirements
CDBG funds are provided to for-profit businesses to benefit a low- to moderate-income person, and/or to create one FTE job for each loan awarded. The 2014 HUD Income Guidelines can be accessed here.