Agenda - Council - 03/13/2001 - Laserfiche WebLink

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Memo To: From: CC: Date: Re: Ramsey City Council Michael J. Mulrooney Jim Norman March 7, 2001 Revolving Loan Fund Guidelines -202- As a result of the Systematic Refrigeration Project, the City of Ramsey will have the ability to create its own Revolving Loan Fund (RLF) for Economic Development. Part of the financing package that was put together to attract the company to the City of Ramsey involved a grant that was applied for and received by the City from the Minnesota Department of Trade and Economic Development. The grant provided funding in the amoUnt of $300,000 to the City who in turn made a low interest loan to the company with the grant proceeds. As the company repays the loan, the State allows the City to retain the first $100,000 of principal plus interest associated with the loan payments. This will happen in approximately June of 2004After this date, the City must pass to the state succeeding loan payments received from the company.. According to the amortization schedule, the City will collect approximately $128,000 in principal and interest before any loan payments need to be transferred to the state. This balance will be used to capitalize the Revolving Loan Fund In these days of continued cut backs in Federal, State and other public sources of money for economic development, locally based revolving loan funds are increasingly important. The existing array of financing tools, both private and public, do not always meet the needs of small businesses and or potential development activities. The creation and implementation of a revolving loan fund is an effective way to address both of these concerns. As the RLF recovers principal and interest from outstanding loans, the recaptured money is made available to another borrower. By providing critical subordinated financing, Corporate Address: 8960 Springbrook Drive Phone: (763) 780-7900 Suite 230 Fax (763) 786-6606 Mpls. MN 55433 i I I I I i I I I I I