|
The Kenai Peninsula Economic Development District’s Revolving Loan Fund (RLF) provides alternative financing options to small businesses. Financing is available to support the startup and expansion of businesses within the borough which create long-term employment and diversify the economy. The types of businesses targeted by the RLF include: Projects that encourage growth and diversification of employment and investment; Projects emphasizing job retention or creation; Projects adding value to existing businesses and industries; Projects providing a product, business, or service which is not now available or which is currently imported into the area; Projects utilizing existing vacant industrial or commercial buildings; Projects supporting minority or women in business development opportunities; or Projects responding to international demand for local products, services, and attractions (i.e., marine resources, timber products, and tourism). The following type of activities are eligible: Fixed asset and equipment loans to new or expanding businesses; Working capital; or Remodeling of existing vacant buildings for owner occupancy. ELIGIBILITY Projects that are financed with RLF proceeds must be located within the Kenai Peninsula Borough and stay within the Borough until paid off. Applicants basically have no other alternatives for financing sources. For example, applicants have applied with thier bank, and the bank has denied the request to finance the total request. Therefore, we provide gap financing. That is, we finance a portion and participate with banks and other lending institutions. EDD typically finances one third of the total amount required. Companies should meet the criteria of "small business" as established by the U.S. Small Business Administration. The following types of project costs will be considered: Acquisition and assembly of land; Development of real estate; Investments which will accelerate recycling of land and facilities; Land costs; Building costs; Machinery and equipment costs; Working and start-up capital; Infrastructure costs; or Relocation costs. As a general rule, loan funds may not be used to finance costs incurred prior to approval of an application; nor, to refinance loans made by other lenders, except interim construction loans. To insure that loan funds do not substitute for available private capital, applicants must supply either: 1) turndown letters from other lenders listing the terms and reasons for denial; or, 2) a list of lenders that were contacted, the amount of financing requested, and the reasons for denial. Applicants will be required to substantiate these items when in question. INTEREST RATE The interest rate will be determined by the Loan Review Committee. It will be a fixed interest rate comparable to rates given for loans of similar size, maturity, and purpose in the project area. EQUITY REQUIREMENT The borrower is required to invest at least 10% of the total capital requirement. RLF loan funds will not ordinarily cover more than 33% of total project costs; nor, except in unusual circumstances, will a RLF loan constitute 50% of the debt financed portion of a project. LENDING LIMITS The maximum loan amount to any one entity will be $50,000. Loan amounts will not be less than $5,000. LOAN TERMS Loan terms will be set by the Loan Review Committee. The repayment period of loans may not exceed: 20 years for fixed asset loans. The term may not exceed the useful life of the asset purchased; or 5 years for working capital loans. The repayment period on the loan will not exceed the repayment period of the associated private sector loan(s). COLLATERAL The amount of collateral required will be determined by the Loan Review Committee. The loan amount will not exceed 90% of the appraised value or cost of the collateral, whichever is lower. Sufficient collateral will be required on all loans and will be in the form of liens on fixed assets such as real estate and machinery/equipment, as well as accounts receivable, inventory, lease assignments, etc. All assets financed will be used as collateral, and other no project assets may be used in addition. Loans may be in subordinate lien positions to the associated private sector loans. Personal guarantees will be required of all persons holding an ownership interest in an applicant. LOAN FEES An origination fee of 1% of the amount borrowed will be charged, with a minimum of $250, plus closing costs. A nonrefundable application fee of $50 must accompany all applications. If the application is approved, the $50 will be credited toward the 1% origination fee. TECHNICAL AND MANAGEMENT ASSISTANCE Our staff has the management and accounting experience needed to provide support in business planning, setting up an office and accounting systems. Technical assistance is provided at no cost. FEDERAL REQUIREMENTS The following federal requirements are applicable to this loan program. A violation of any of these requirements by an applicant will be cause for default of the loan. Civil Rights. All applicants must submit EDA Form 503 and EDA Form 612. Applicants employing more than 50 employees must also submit an affirmative action plan. These forms will assure nondiscrimination, provide current and projected employment data, descriptions of employment practices, etc. Monitoring of these practices will continue throughout the duration of the project with periodic updates of the EDA Form 612 as necessary. No applicant will be discriminated against on the basis of race, color, national origin, religion, handicap, sex, or sexual preference. Environmental Considerations. Applicant must assess the anticipated impacts on, and of, air quality, water quality, solid waste management, land use, transportation, etc., as they relate to the proposed project. These assessments must be included with the initial application. All environmental review requirements of the State of Alaska must be met by the potential borrower. It is the responsibility of the applicant to insure all requirements are met. Flood Hazard Insurance. No loan for a project located in a flood plain will be approved unless flood hazard insurance is provided. Access for the Handicapped. All construction projects to which the public will have access, must provide access to the handicapped. Historic Properties. All applicable projects must be cleared through the State Office of Historical Preservation. Relocation. If a project is removed from the eligible commuting area in which it was approved, the loan will be immediately due and payable. Loans for projects which involve the relocation of jobs from a non-eligible area to an eligible area, will not be approved. Davis-Bacon Requirements. Construction, financed in whole or in part by this loan program, must meet requirements of the Davis-Bacon Act.
|
