Agenda - Economic Development Authority - 02/09/2017

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ACG Economic . . Advisors Menno To: Ramsey EDA From: Mike Mulrooney, Economic Development Consultant CC: Patrick Brama Date: January 5, 2017 Re: American Print & Digital Request for Exception to RLF Policy The City of Ramsey has been approached by American Print & Digital regarding the Ramsey Revolving Loan Fund. American Print & Digital is a local Ramsey business who is interested in purchasing an existing building located at 6320 US Highway10. The company has been exploring financing options to acquire the property. The financing option of choice appears to be the SBA 504 Loan Program. The 504 Loan Program provides growing businesses with long-term, fixed-rate financing for major fixed assets such as land, buildings, machinery and equipment. A typical 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from a Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and an equity injection of at least 10 percent from the small business. American Print & Digital has determined that while the SBA 504 program provides excellent financial leverage it will be difficult for them to inject 10% into the financing structure without potentially jeopardizing the company's working capital position. Therefore, additional financing options are being explored including the Ramsey Revolving Loan Fund to fill a perceived equity gap. The current policy for the Ramsey Revolving Loan Fund also calls for an equity injection of 10% by the borrower. The company is requesting that the Ramsey EDA consider an "exception to policy" that would allow the Ramsey Revolving Loan Fund to inject 5% into the project financing structure over and above the SBA 504 Loan structure thereby achieving 95% leverage. This would amount to $70,000 of