07/14/92 - Laserfiche WebLink

Home

H. ; A'ny limiting factors I. ' R~I estate tax consequences for the City Finally, as t~-lheiproposal, a detailed source and use of funds is crucial. The proposal must demonstrate lban ~epayment through the project's proforma. In reviewing the proforma, we need to determine h°~irealistic are th, e assumptions, and if things should change as they always do, how will this ~fect the company s ability to repay the loan from operating profits. The review of past financial~s,tatgments, including the profit and loss statements for the past three (3) years, are helpful in gaugmglthe soundness of the cash flow projections in the proforma. The objectiv~ is[to finance only those projects which will provide benefits to the City commensurat~ wi~h the risk and specifically to finance only those projects which will not go into default or, il' they do, will be self-rescued by the nature and quality of the deal. Given this, th~ following are the EDA's general underwriting guidelines for financing a project. 1. The project to be financed will typically be general purpose. General purpose buildings are those that ~:ould easily be renovated to suit another use. If the project is not considered gener~ pU¢ose, then other considerations need to be taken into account to minimize the EDA's[riskSn financing the project. 2. If the l~roje¢t financing consists of all equipment or has a large equipment component, then the un4e~ting will need to address issues of: term of loan will most likely be short given the us6ful'~ltfe of the equipment, examination of the sales and revenues to be generated by the eqtiipm[~nt~ and other considerations of equipment financing. 3. The c6~pah~ y shall provide financial statements for each of the three (3) years prior to the loan. [Ha~ing audited financial statements will provide a degree of comfort that a disinte~estelt outside party has reviewed the financial operations of the company. Personal finanC~l ~t~tements should also be provided to allow a trace of transactions between the corporfitiod and individual and allow a clearer view of the true worth of the personal and corpo~te eatities. 4. The nei profits of the company should be stable or improving in each of the last three (3) years, ~x¢~ptions may be made for unusual circumstances. 5. The ¢ohapafly shall provide at least one job for every 1,000 square feet of building space finance, Uflless waived by the EDA. 6. Minimr~m basic terms and conditions for any financing throUgh the EDA, unless modified or exe~pt~ following a discussion and agreement by the Loan Committee: a) ~aZ~dous materials indemnification agreement shall be provided; b) Financial statements and other reports are to be provided to the EDA and others at a time:of application; c) ?he financing will be personally guaranteed as full recourse debt, unless waived or inodified by the Loan Committee; d) The Guaranty Agreement will include both corporate and individual guarantees; RLF Page 4 of 7