Agenda - Economic Development Authority - 09/08/2004

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PAGE 4 TYPES OF ECONOMIC ASSISTANCE Revolving Loan Fund (RLF) The EDA/City may provide short term financing to assist businesses in the form of a loan. The purpose of such financing is to provide gap financing where conventional funding sources are not sufficient to meet the business needs for new facilities, equipment, operating capital and start up costs. All loans are subject to the availability of funds. Interest on loans offered under the Becker Revolving Loan Fund shall be issued at the prime lending rate at the time of the execution of loan documents. Interest may be fixed or variable depending on an agreement between the EDA and the applicant. The EDA encourages bank participation in the processing and management of the loan. Bank participation is desirable and is a key factor in consideration of an application. The normal amortization of a loan will be three years, with no loan amortization exceeding five years. Principle payments may be deferred during the repayment period but accrued interest shall be paid monthly. The specific loan period is to be decided upon review of financial statements of the business in question, the purpose of the loan and the value of the collateral. No loan is to exceed fifty percent of the aggregate amount of the project, to a maximum amount of $100,000.00 per project. The revolving loan fund is intended to compliment, not to compete with private lending institutions. All loans are to be personally guaranteed by all interested parties involved. To be eligible, a business must be credit worthy or a start up business must have a good feasibility study. Loans may be granted for any project costs that are assumed in acquisition, conversion, expansion, retention, construction, planned improvements, utilities, landscaping, machinery, equipment, working capital and any professional or legal fees incurred during the process. Prior to the approval of any economic assistance, the city attorney, city staff or any other professionals the City Council or EDA may request, shall review the application and any other documentation to ensure all necessary information has been provided. The city attorney should prepare, or if prepared by others, review all documents related to the public assistance. The cost incurred by the city for such review and preparation shall be paid by the applicant.