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R~MSEY ECONOMIC DEVELOPMENT AUTHORITY REVOLVING LOAN FUND POLICY Thc Ramsey Economic, Development Authority and its Board of Commissioners (hereinafter referred to as ~he !'Board ') believe that a revolving loan fund is desirable and, over the long term, a profitable mca~s ~ employing funds available for investment. They also recognize that the lending of money nee~ssa~ly includes some reasonable business risks and therefore, establishes this loan policy to prov~dP~uidance and direction to assist the Board and the City of Ramsey in fulfilling their lending o~jec~ves and responsibilities. LOAN POLICY ~iOBJECTIVES 10. All loa0~ s 11 be made in full compliance with all applicable federal and state laws. The EDA ~ill consider loan requests subject to sound lending practices. These loans will serve ~e City of Ramsey in its goals of economic development. All information regarding a credit applicant, borrower or guarantor obtained by the EDA shall bd heist in strictest confidence. A loafi file will be made for each loan request. All credit information and loan documentation will be updated annually, or more often, as the loan agreement requires to keep ali file~ current. Each 14an ~vance will be detailed by purpose, collateral and most specifically, source of repayn~nt~ !Financial statement analysis, visitations and general observations by the EDA will betdoeumented on a timely basis. The credit file will contain enough information to allow ~iny[EDA member, unfamiliar with the project, to obtain sufficient knowledge without, undue burden. On exi~tingicredit lines, annual balance sheets and income statements are required of all borrow~r$.i !In addition to the annual statements, files will contain any other annual or peri°die d0~umentation required by a regulatory or supporting agency (Anoka County, SBA, cie.)~' All loan files will contain a "loan comment sheet". This comment sheet will contain a stateme.~, t r~garding the loan purpose, the specified source of repayment, the term of the loan, a ~oll~teral description, and a collateral valuation. The comment sheet should also detail at~y °~her requirements which need to be monitored to comply with the terms of the loan a~em~nt. Loans f~)r th~ purposes of acquiring fixed assets will generally not be amortized more than five (5) ~year~. These types of loans shou!d be made commensurate with the functional life of the fi~ted asset as well as the borrower s equity position. Profital~.te oOerations are key to the continued viability of a business and to the repayment of an a~nort!z, ed loan. Therefore, the EDA should only lend to businesses which have positive[wor~ing capital positions. In general, the working capital position as measured by the curr~nti~nd quick ratios should be comparable to industry averages as measured by Robert Mon-!s Associates (RMA) statistics. [ : Loans may not be approved for a borrower with successive years of operating losses and a poor capital, position or for a borrower with a recent history of sustained losses. RLF Page 6 of 7