Agenda - Council - 01/24/2017 - Laserfiche WebLink

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CC Regular Session Meeting Date: 01/24/2017 Submitted For: Patrick Brama,Administrative Services By: Patrick Brama,Administrative Services Information Title: Approve Request for Exemption to EDA Revolving Loan Fund Guidelines Purpose/Background: PURPOSE Consider request from Ramsey business to allow for an "exception" to the EDA RLF Guidelines, related to minimum equity. More specifically,to allow for a reduction in the required minimum amount of business equity, from 10%down to 5%, only in situations in which the Small Business Administration (SBA) 504 Loan Program is being used by a Ramsey business. The SBA 504 Program requires a minimum 10%equity--and the current EDA RLF guidelines also require a minimum 10%equity--which doesn't allow the City RLF program to provide financing (not already provided by the SBA loan). Under the proposed policy exemption,the City RLF could be considered as part of the 10%owner's equity and all financing sources could be "stacked"together to create a complete financing package.. PROCESS (1) The purpose of this case is to provide the applicant approval of their"exemption" request to the City's EDA Revolving Loan Fund Guidelines, related to minimum equity. The purpose of this case is not to award a loan. (2) In February, a follow up case will be brought to the City Council. In February, a formal loan application from American Print&Digital, and the subsequent credit analysis/underwriting,will be brought back to the EDA and Council for consideration. The purpose of this future case is to consider awarding a loan. BACKGROUND The intent of the EDA RLF program is to provide gap financing in situations in which conventional/normal financing is not available for small/medium sized businesses,to make good projects "GO." Please see attached EDA RLF guidelines for details. The SBA 504 Loan program is a very common financing solution for small/ medium sized businesses. Because of the 10%equity requirement in the EDA RLF guidelines,these two programs cannot stack. NOTE: the SBA 504 Loan Program considers the EDA RLF as equity. Also, it should be noted, staff has received this general concern/request in the past from other Ramsey businesses--this is not uncommon. APPLICANT/BUSINESS The business considering the EDA RLF is American Print&Digital. They are located of Radium Street in eastern Ramsey,just south of Bunker Lake Boulevard. They currently lease about 5,000 sf in a multi-tenant spec building. They are a"broker" style printing firm. Meaning,they don't work with end-user customers directly--they only work with brokers. Brokers sign contracts with American Print&Digital for work. They have 7 full-time employees. The business started in 2009 and has steadily grown year-after-year. American Print&Digital needs room to grow, at least 10,000 sf total. They recently placed an order for a very expensive piece of equipment,which they already have enough orders to run for a minimum 6-hours per week, and