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Startup Housing Opportunity Venture Loan – (SHOVL)

Pre-Development Loan Program

Loan applications open on Thursday April 21, 2022

The goal of SHOVL is to provide funding to developers for expenses incurred prior to the closing of their permanent financing for housing developments in Kansas communities that have experienced housing challenges.  The housing developments must have a direct connection to past, current or future economic development efforts.  Developers may include private individuals, corporations, limited liability companies, nonprofits, and local units of government. The Startup Housing Opportunity Venture Loan (SHOVL) funds will be provided on a project-by-project basis in communities under 10,000 population. Only one project per application please.

Housing = Economic Development

Economic development, including new business recruitment, business expansions and job retention, is highly dependent on available and adequate housing. In order to qualify for the SHOVL program the housing developments must have a direct connection to past, current or future economic development efforts. This link between housing and economic development may include:

  • New job creation within the last several years
  • An opportunity to attract a new business with the development of workforce housing
  • Expansion plans by a local existing business
  • A pending economic development project that will require additional housing
  • Job retention of a local business dependent upon adequate housing development

Program Funding

SHOVL funds will be provided on a project-by-project basis in communities under 10,000 population. Financial characteristics are as follows:

  • Maximum loan for any single project will be $25,000.
  • No interest will be charged for use of the SHOVL funds.
  • Developers will need to provide a $5,000 match (20%).
  • Developer match must be spent before SHOVL funds can be transferred.
  • SHOVL funds must be repaid within 30 days of the closing of the construction or permanent financing.
  • Repaid SHOVL funds will be recycled to assist other developers in future housing developments.

SHOVL Program Description

Program Description

The Startup Housing Opportunity Venture Loan (SHOVL) funds will be provided on a project-by-project basis in communities under 10,000 population.

No developer will be able to access more than three (3) loans at one time unless the Kansas Department of Commerce provides prior approval.

If a developer has multiple project loans, they cannot comingle the funds between the housing developments.  Separate accountings must be kept of each loan.The SHOVL funds can be used for developing single family or multifamily housing.

Developers may use the loan funds for new construction and major rehabilitation.

To qualify as major rehabilitation there must be replacements or improvements that are greater than the acquisition cost of the proposed housing.

The SHOVL funds will be transferred to the developer once their completed application has been reviewed and approved by the Kansas Department of Commerce; they have paid their application fee; and provided proof of their match expenditure.

The developer must sign a loan agreement where they will be liable for the repayment of the SHOVL funds should the SHOVL funds not be appropriately spent. 

The developer will provide progress summaries of the development to the Kansas Department of Commerce quarterly as well as a final accounting of the expenditure of the SHOVL funds.  The developer may substitute a progress summary provided to other stakeholders (KHRC, investor, lender, etc.).  The Kansas Department of Commerce may adjust the frequency of the progress summaries based upon the complexity of the development.

Any reports or studies paid for with SHOVL funds will convert to the use by the local government for future use by a new developer should the original developer not go forward with their project.

The Kansas Department of Commerce must ascertain that the proposed housing project has a reasonable chance for success before it can receive SHOVL funding.

The Kansas Department of Commerce reserves the right to require additional information or impose additional program limitations prior to approval.

SHOVL Applications

A $75 loan reservation fee will be required if you are approved

Applications will be funded on a first-come, first-serve basis until funding is depleted.

Prior to receipt of SHOVL funds the developer must obtain a letter of intent from the local government indicating at least the following:

  • The local government is aware of and supports the developer’s proposed housing development including its location.  Attach site control information if available.
  • There is a shortage of quality housing within the city/county that is affordable at the local wage rates despite the best efforts of public and private housing developers.
  • The shortage of housing is expected to persist, and additional incentives are needed.
  • The shortage of quality housing is a substantial deterrent to future economic growth and development in the city/county.
  • The future economic well-being of the city/county depends on the governing body providing additional incentives for the construction or renovation of quality housing in the city/county.

Attached to your letter from your local government please include the following:

  • A detailed description of the proposed development.
  • A description of the wage rates of the intended occupancy.
  • Provide an approximate timeline for development.
  • Any pending approvals by the local government that will need to be addressed prior to commencement of construction.
  • List the proposed use of the SHOVL funds as well as the source of the developer’s financial responsibility (i.e. developer capital, 3rd party sources of financial assistance etc.).
  • The developer must identify what links the housing project to local businesses.
  • Describe the experience and background of the developer.
Eligible Use of Funds
  • Expenditures that are eligible for payment or reimbursement may include the following:
    • Site control costs (option agreement or contract)
    • Title insurance commitment
    • Real estate appraisals
    • Environmental Reviews (but no remediation)
    • Initial energy audits
    • Site engineering fees
    • Architect preliminary or working drawings 
    • Project specific application fees
    • Public notification fees
    • Zoning/rezoning fees
    • Attorney fees directly pertaining to the development (no litigation fees)
    • Preliminary utility fees
    • Project development consulting fees
    • Preliminary fees related to the rehabilitation of historic structures
    • Miscellaneous items with prior approval of KDOC
Post Funding Requirements
  • Startup Housing Opportunity Venture Loan (SHOVL) funds must be repaid within 30 days of the closing of the permanent financing for the housing development.
  • The developer will need to submit 3rd party paid receipts for both the SHOVL funds and their match requirement.
  • Should the developer not go forward with the development for reasons beyond their control, the SHOVL loan will be forgiven once the developer provides information that the SHOVL funds and the match requirement were appropriately spent.
  • There may be periodic inspections or reviews to ensure the appropriate use of the SHOVL funds.

Elizabeth Heron, Placemaking Community Development Specialist


[email protected]

Housing Resources in Kansas