SMALL BUSINESS REVOLVING LOAN PROGRAM

Transcription

1 City of Danville SMALL BUSINESS REVOLVING LOAN PROGRAM General Program Guidelines Application Procedures and Submission Requirements Application Form Required Certifications Danville Department of Community Development (217) April 3, 2018

2 TABLE OF CONTENTS GENERAL PROGRAM GUIDELINES 3 A. Purpose of the Small Business Revolving Loan Program 3 B. General Loan Terms & Conditions 3 C. Eligible Applicants 3 D. Eligible Costs 4 E. Standards for Projects Involving Rehabilitation 4 APPLICATION PROCEDURES AND SUBMISSION REQUIREMENTS 5 LOAN APPLICATION FORM 6 CERTIFICATION for Non-Discrimination&Low/Mod Benefit 8 Page 4/18/2018 2

3 GENERAL PROGRAM GUIDELINES A. Purpose of the Small Business Revolving Loan Program The Danville Small Business Revolving Loan Program hereinafter referred to as the Program is a focused effort to support the creation and expansion of small business opportunities within the City of Danville. The City, through the federally funded Community Development Block Grant Program, initially allocated $100,000 to fund this program. Loan payment principal and interest are used to replenish the loan fund; thus the term revolving loan fund. The purpose of the Program is to assist local for-profit business entities in expanding existing operations, in rehabilitating existing commercial buildings to facilitate said business expansion, and in assisting new firms pursuing new business opportunities. The Program provides financing at a lower interest rate with a variable term up to ten (10) years. Final loan terms are determined based on discussions between the applicant and the City's Community Development Department staff, hereinafter referred to as the Department, and participating financial institutions, with final approval made by the Danville City Council. B. General Loan Conditions The maximum term for a loan issued under this program shall be ten (10) years. The Program s funds must be completely repaid within this term. Exact terms of each loan will be negotiated on an individual basis. In the case of tenant businesses, the term of the loan will not exceed the period of the lease; however in some cases, the loan term may be tied to an option period on a property. The interest rate for this program shall be fixed at 1%. The minimum loan amount for this program shall be $5,000 and the maximum $50,000. The maximum may be exceeded when investments that will create a significant number of new jobs for the City are imminent. The Program loan amount shall not exceed 50% of the total project cost. At least one full time equivalent (FTE) job must be created/retained for every $10,000 of Program funds borrowed for a project. Applications must be submitted, reviewed, and approved before the project begins. Costs incurred prior to application approval are ineligible. All loan payments shall be made to the Department or if applicable, to a participating financial institution. C. Eligible Applicants Applicants, for the purpose of this document shall hereinafter be referred to as Borrower(s). Any for-profit property owner, tenant, or purchaser of a property is eligible to participate in the Program so long as the business housed at that location currently employs 25 or fewer employees and has annual net revenues of $1 million or less. Exceptions may be made, relative to the size of the borrower s business, when a significant opportunity to create new jobs in the City is presented. Proposals will be considered from eligible borrowers located within the City limits of the City of 4/18/2018 3

4 Danville. City elected officials and other City employees who, by reason of their position with the City, can influence the decision on any particular loan, are ineligible. D. Eligible Costs While the Program will provide funding for a wide variety of activities, some constraints exist since CDBG funds will be involved in each project. It is the responsibility of the Department to demonstrate that projects assisted by this program address the statutory objectives of the federal Community Development Block Grant Program (CDBG) which is the funding source for the Program. In this regard, the Program will generally provide funding for real property improvements (interior and exterior) and equipment which will facilitate the retention or creation of jobs for low to moderate income persons. Examples could include the rehabilitation and renovation of an existing storefront and interior business space, updating existing electrical and plumbing systems, or the purchase of manufacturing equipment. Proceeds from the Program can also be used to finance the purchase of inventory or operating capital. The purchase of land, and the purchase of equipment to be leased to others will be discouraged, and debt refinancing is prohibited. Funds must be used for improvement or expansion of the business, only. Anything that can be used outside of the business (televisions, wall hangings, etc.) are ineligible. In the initial screening of proposals, the Department will determine if one or both of the following CDBG statutory objectives are addressed: 1. Creation and retention of jobs which benefit low and moderate income persons (At least 51 percent of the jobs created/retained must benefit low/moderate income persons.) 2. Provision of public infrastructure improvements in support of specific job creation or retention activities. For example, a project which creates new employment opportunities for unemployed persons would address benefit to low and moderate income persons. Special emphasis will be placed on projects which create expanded employment opportunities for low and moderate income persons. Businesses that accept a loan through this Program must agree to make a concentrated effort to hire low/moderate income employees, and to provide data about their employment to the Department semiannually. E. Standards for Projects Involving Rehabilitation All improvements funded under this program will be made in accordance with local building and zoning requirements. In certain instances as determined by the Department, a project may require the submission of plans and specifications in order that building code compliance and costs may be reviewed. Whenever a property assisted by this Program is determined to be on, or eligible for inclusion in, the National Register of Historic Places due to its historic and/or architectural significance, the Secretary of Interior's Standards for Rehabilitation will govern the proposed improvements. The Department will consult with the Danville Historic Preservation Commission to determine if such properties are eligible for or listed on the National Register, or designated as a local Landmark. In accordance with the above, the Department will assist applicants and provide the information needed to comply with these standards. Note: In some instances, an Environmental Assessment may be required for certain projects. When applicable, this process must be completed by the Department prior to the disbursement of the Program s loan funds. 4/18/2018 4

5 Unless exempted under federal law, construction workers paid for with Program loan funds are subject to the Davis Bacon Prevailing Wage laws. F. Participating Financial Institutions a. Allerton Bank b. Catlin Bank c. First Farmers Bank & Trust d. First Midwest Bank e. First Financial Bank f. Iroquois Federal g. Old National Bank 4/18/2018 5

6 APPLICATION PROCEDURES AND SUBMISSION REQUIREMENTS A prospective borrower should meet with the staff of the Department to discuss a potential project, review program requirements and the process for applying for and receiving a loan, determine the availability of funds and obtain an application form. Prepare a written statement of what you plan to do and what you wish to accomplish. This does not need to be a formal Business Plan but it would be most helpful if it was. The Small Business Development Center, (SBDC) at Danville Area Community College (2000 East Main Street, Danville, IL 61832) can provide assistance in preparing this document, as well as general training or advice on starting a business. After you have your plan in writing, you should also contact a participating lending institution, if applicable. The lender will help refine your plans, and work thru through the specific project financing. A Program application must be completed and submitted to the Department along with all required attachments and documentation. The following attachments should accompany an application: A signed Certificate of Non-Discrimination/Low-Mod Benefit Site Plan of the business location, as well as any elevation drawings or exhibits needed to illustrate improvements A letter of commitment or other evidence of adequate financing. Documentation that demonstrates that the borrower has a positive net worth. Equity and collateral requirements will be determined by the Department on a case-by-case basis. A current personal financial statement along with a business income and expense statement shall be submitted with the application form to the Department. For loans involving financing for fixed assets, an appraisal and title search shall be provided. Evidence of fire and extended insurance coverage in favor of the Department shall be provided. The Department will review the application and documentation for completeness and for compliance with the Program requirements. The application will then be reviewed by a Small Business Loan Committee, which is a committee consisting of City staff and the participating financial institutions, and a recommendation will be made. If the application is approved by the committee the application and a committee review report will be submitted to the City Council for final action. All loans require final approval by the City Council. Once an application has received final approval, the loan agreement will be executed and the project may proceed. Funds will be made available within 30 days of approval and execution of loan agreement. The Borrower shall then make all loan payments to the Department, or where applicable the participating financial institution, until the entire loan is paid back per the finalized loan agreement. Semi-annually, the Department will send a mandated employment survey to each Borrower which the borrower must complete and return in order to avoid penalties. 4/18/2018 6

7 A. General Information CITY OF DANVILLE SMALL BUSINESS REVOLVING LOAN PROGRAM LOAN APPLICATION Applicant Name Applicant Address (Street, City, State, Zip) Name and Address of Business to Be Assisted (Street) Applicant Phone Applicant Business Phone B. Financial Information 1. How much owner equity do you expect to put into the project? 2. Financial breakdown of the Project: Amount for land/building acquisition? Amount for construction or renovation? Amount for equipment? Amount for working capital? Other costs (describe)? TOTAL PROJECTED EXPENDITURES => C. Type of Business 1. Retail, Office, Professional, or some combination? 2. If an existing business, how many years in operation? 3. If a new business, what is your estimated target date to begin operation? D. Description of Project. 1. Briefly describe the business you will operate. Describe the work you intend to do with the loan funds if you are approved. 4/18/2018 7

8 2. By category, estimate the number of jobs to be created and/or retained as a result of this project. Include the owners (if they are going to work) under the management heading. Number Average Number Average Category Existing/Retained Salary Created Salary Management $ $ Supervisory $ $ Skilled $ $ Semi-skilled $ $ Unskilled $ $ 3. Project schedule: Begin work.(date) Complete work.(date) 4. Do you understand and agree that any construction work you do must conform to local codes and you must use registered contractors? Yes No 5. Do you plan to own the property or lease it? If lease, what is the anticipated length of your lease? 6. Please name any architects and contractors that you expect to use on the project. E. Ownership and Management. 1. Is the applicant business a proprietorship, partnership or corporation? 2. If a proprietorship, partnership or closed corporation, list the names of the owners and percentages owned. F. Required Attachments. The following exhibits must be provided to the Department (1155 East Voorhees Street) before City approval will be granted: 1. A signed Certificate of Non-Discrimination/Low-Mod Benefit 2. Site Plan of the business location, as well as any elevation drawings or exhibits needed to illustrate improvements 3. A Business Plan describing the project. 4. A letter of commitment or other evidence of adequate financing. I hereby certify that all the information in this application is true and complete to the best of my knowledge and that I have read and will comply with the Program Guidelines and Procedures. Applicant(s) Signature(s) 4/18/2018 8

9 CERTIFICATION Non-Discrimination & Low/Mod Benefit I (we) the undersigned Borrower(s) do hereby certify that, relative to activities funded in part by a Small Business Loan approved by the City of Danville, Department of Community Development ( Department ), in an amount of on, (we) understand and agree to comply with the following requirements: A. The Borrower(s) will not discriminate against any employee or applicant for employment because of race, creed, color, sex or national origin. Such action will include, but not be limited to the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Borrower(s) agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Authority setting forth the provisions of this nondiscrimination clause. B. The Borrower(s) shall, in all solicitations or advertisements for employees placed by or on behalf of the Borrower(s), state that all qualified applicants will receive consideration for employment without regard to race, creed, color, sex or national origin. C. The Borrower(s) shall cause the foregoing provisions to be inserted in all subcontracts for any work covered by this Small Business Loan so that such provisions will be binding upon each subcontractor, provided that the foregoing provisions shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. D. The Borrower(s) understand that this loan program is intended to benefit low and moderate income people as much as possible. Income Certification Forms provided by the Department may be required in order to monitor program performance in this regard. E. The Borrower(s) agree to provide employment information to the Department as required in order to monitor the success of this program. Borrower(s) Signature(s) Witness 4/18/2018 9