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Working Capital <br />Availability of <br />Personal Resources <br />sufficient to protect the Oakdale EDA from realizing a substantial <br />loss. <br />Proceeds from an Oakdale 'Seed Fund loan should not be used for <br />working capital or to refinance prior obligations of the small <br />business concern. <br />Since the primary focus of the Oakdale Seed Fund is economic <br />development, personal resources of the owners or principals of the <br />small business concern should not usually disqualify the small <br />business concern from receiving assistance. Where credit factors <br />indicate the need for additional capitalization, the injection of <br />personal resources may be required to make the loan credit -worthy. <br />Personal <br />Guarantees The EDA should require the personal guaranty of any person <br />owning 20% or more of the small business concern regardless of <br />the form of ownership. <br />Participants and <br />Structure of Project <br />Financing <br />Maximum Private Sector Exposure <br />The Oakdale Seed Fund is designed to foster projects contributing <br />to sound economic growth in Oakdale in such a way that <br />maximum private sector exposure is stimulated and encouraged. <br />The Seed Fund should not be a substitute for conventional business <br />financing or be used in place of other specialized state. federal or <br />local programs that may be better suited to the specific project <br />needs. In most Seed Fund projects a private sector lender will <br />make a separate secured loan equal to a certain percentage of the <br />total project cost and will usually be secured by a senior lien on <br />project assets acquired with the financing. The FDA's share of the <br />project financing will usually be secured by a junior lien position <br />on project assets. The EDA will use the Seed Fund to participate <br />with the private sector lender in making the total loan to the small <br />business concern. <br />Private Sector <br />Lender Financing may be provided by regulated and/or non -regulated <br />financial institutions or noninstitutional sources if they are in the <br />business of providing financing for commercial purposes and they <br />are not associated with the small business concern receiving <br />55 <br />