CECIL COUNTY REVOLVING LOAN FUND APPLICATION

Transcription

1 CECIL COUNTY REVOLVING LOAN FUND APPLICATION

2 CECIL COUNTY REVOLVING LOAN FUND INTRODUCTION The Revolving Loan Fund is intended to capitalize on the loan repayments from Moon Nurseries, in accordance with the Community Development Block Grant Program awarded by the Maryland Department of Business and Economic Development. Additional funds may be added to the fund s balance as they become available. MISSION STATEMENT The purpose of the revolving loan fund ( RLF ) is: 1. To promote job growth for low-to-moderate income persons. 2. To provide an incentive by the County to attract, expand or retain a small business by extending below market rates and favorable terms. 3. To provide funds to credit worthy businesses unable to obtain full financing through traditional sources due to limited equity, collateral or marginal cash flow. CONSORTIUM PARTICIPANTS Cecil County will be the sole participant in funding the revolving loan fund. The following banks will participate in reviewing and approving requests to borrow from the RLF: Banks Bay First Bank The Columbia Bank/Cecil Federal* NBRS* People s Bank of Elkton Harford Bank Cecil Bank* M&T Bank PNC* National Penn Other Delaware and Pennsylvania Banks can also participate. * indicates loan officer is a member of the RLF Committee TARGET BORROWERS Small businesses and industries, including projects in designated revitalization areas. The RLF will also be made available to start-up companies on a case-by-case basis. BORROWER S RESPONSIBILITIES The Borrower will be required to obtain initial funding from a local bank. The appropriate due diligence information will be submitted directly to the primary bank. (Refer to Underwriting Criteria Section.) The Borrower will make all job opportunities available to low-to-moderate income persons. The Office of Economic Development will furnish forms to be completed by those offered a job and will monitor the jobs created through the life of the loan. The Borrower will cooperate with

3 record keeping and site visits to the Company by the Office of Economic Development and/or the Maryland Department of Housing and Community Development. During the life of the loan, the company will be required to provide the business tax returns or acceptable financial statement to the Office of Economic Development on a yearly basis, if requested. The Borrower will be responsible for completing a RLF application and Jobs report (see attached). TERMS OF LOAN Amount Initially, minimum of $20,000 to a maximum of $75,000. Depending on the level of capitalization from Borrower, maximum loan may be increased. Uses Loan proceeds must adhere to the Community Development Block Grant program to specifically fund: - land or building acquisition - machinery/equipment - inventory - other capital requirements On a case-by-case basis, the RLF may be used for equity injection, interest rate subsidy or other gap financing deemed necessary to move the project forward. Ineligible businesses include: real estate investment, lending pyramid, not-for-profit, or political or religious affiliation, pawn shops, massage parlors, adult video stores, bars and liquor stores. Applicable Lending Assistance Limited to no more than 50% of the total project costs. Typical Structure % equity or subordinated debt from Borrower - 50% or greater from Lender - up to 50% from RLF Capital Fund Fees The Borrower will pay a one-time/non-refundable application fee of $100, once the package is submitted to the RLF Committee. The Borrower will be responsible for all applicable closing costs to include lien searches, recordation, legal fees, etc.

4 Interest Rate The interest rate is 50% of Prime, fixed for the life of the loan. Repayment/Maturity Real estate five years maximum maturity, 20 years amortization. Equipment five years maximum maturity, depending on useful life of equipment, straight-line depreciation. Collateral First lien position on asset financed; subordinated to the primary lender. A lien may also be placed on the personal assets of the principal(s), including an Indemnity Deed of Trust on personal residence. Guarantees Personal guarantees will be at the discretion of the Loan Committee. Covenants The retention or creation of at least one job is required. Jobs will be made available to low-tomoderate income individuals. Additional covenants will be at the discretion of the Loan Committee to include cash flow coverage ratio, current ratio, debt/tangible net worth, etc. UNDERWRITING CRITERIA The primary lender will be required to submit a standard loan package to include: Bank s Loan Fact Sheet and underwriting memo outlining nature of Borrower s business, description of collateral, financial analysis, debt service coverage ratio, collateral loan to value, and risks/mitigants. Bank s commitment letter or proposal letter indicating the need to participate in the Revolving Loan Fund (only for those packages coming directly from the lending community). Business Plan, if necessary. Historical financial information to include: - the past three years fiscal year-end income statements and balance sheets - most recent interim financial statements - the past three years corporate tax returns, if the Borrower is a Sub Chapter S Corporation, Partnership, or LLC - the past three years personal tax returns of business owners Three years income statement projections

5 Current accounts receivable aging report Current personal financial statements from the principals of the company Collateral description of asset financed Appraisal of property, if applicable LOAN REVIEW COMMITTEE Each of the community-based lenders, and the Director of Cecil County Economic Development, will serve as a member on an Advisory Board, and the Board will also constitute the Loan Committee. A total of no more than ten (10) members will initially constitute the Loan Committee. A Chairperson and Vice-Chairperson from the Loan Committee will be appointed. The County Treasurer shall be a nonvoting member of the Board. The Loan Committee will be required to vote on an approval of a loan request. A majority vote is required for the loan approval and authority for the application to proceed for Jobs review and final County Commissioner approval. PORTFOLIO ADMINISTRATION The Cecil County Office of Economic Development and the County Attorney will generate Loan Commitment letters and other legal documentation as needed to initiate the loan and payment schedule. The Cecil County Treasurer s Office will be responsible for processing loan disbursements, generating monthly payment notices to the Borrower, and processing collections. The Cecil County Treasurer s Office will provide loan status and balance amounts as requested by the Office of Economic Development. The Treasurer s Office will assist the Office of Economic Development in completing the required semi-annual reports to the Maryland Department of Business and Economic Development and the Maryland Department of Housing and Community Development. The Cecil County Treasurer s Office will notify the Office of Economic Development of any payment delinquencies exceeding 45 days or loans that are repeatedly delinquent for shorter periods. The Cecil County Office of Economic Development, in conjunction with the County Attorney, will initiate collection and/or foreclosure proceedings on all delinquent loans. (rev. 8/10/11)

6 Date: I. General Information CECIL COUNTY ECONOMIC DEVELOPMENT Revolving Loan Fund Application 1. Borrower s / Guarantee Name: (Owner of property Tenant ) 2. Year established: Prior 12 Month Sales: Number of Employees: Number of New Jobs Projected within the next two years: 3. Social Security Number/ Corporate ID: 4. Business Address: Street, City, State, Zip Code 5. Contact Name and Title: 6. Phone Number: Fax Number: 7. Business Structure: Sole Proprietorship Sub-S Corp Partnership Corp LLC Other 8. Business Type: Manufacturer Wholesaler/Distributor Retailer Contractor Service Company(describe) Other 9. Name of Primary Financial Institution: Account Officer name and phone number: II. LOAN REQUEST INFORMATION 1. Amount of Loan: Bank: Revolving Loan Fund: 2. Purpose of Loan: 3. Collateral pledged: If applicant is an individual: Signature of Applicant If applicant is a corporation or partnership: Name of Applicant By: Signature of Authorized Officer or Partner (Revised 11/4/05)