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Interest Rate <br />financial assistance. The terms and conditions of such fmancing <br />must be acceptable to the Oakdale EDA based on the small <br />business concern's ability to repay the Oakdale Seed Fund Loan. <br />The lender and EDA may establish their own rate provided the rate <br />is legal and reasonable. The lender and EDA may charge either a <br />fixed or variable rate of interest on their loan. A renegotiable rate <br />of interest is acceptable provided terms and conditions are <br />established and agreed to both by the Oakdale EDA and the lender <br />at the time of the loan approval. The EDA must be aware of the <br />lender's terms and conditions in assessing the small business <br />concern's ability to repay the Oakdale Seed Fund Loan. <br />Balloon Payment Such payments may be considered where circumstances warrant <br />their use. <br />Amount <br />Maturity <br />Personal Guarantees <br />Alter Ego Loans <br />The maximum amount of private lender fmancing should be <br />included in each project. At least 50% of the project cost should be <br />funded by a private lender. <br />Maturity must be reasonable in relation to the life of the asset <br />being financed. In no instance should the maturity of the Oakdale <br />Seed Fund Loan exceed the maturity of the loan being provided by <br />the private lender. <br />The EDA requires the personal guaranty of any person owning <br />20% or more of the small business concern regardless of the form <br />of ownership. Where ownership ranges from 5% to 19% the <br />requirement for personal guarantees is discretionary. A partial <br />guarantee may be considered for less than the total amount of the <br />loan. Generally, a guaranty will not be required where ownership is <br />less than 5%. <br />For tax and other reasons some small business owners prefer to <br />separate the ownership of the asset from the operating small <br />business concern. In such cases the small business owners form <br />two legal entities: One entity owns part or all of the fixed assets <br />and the other entity is the operating company. Loans will be <br />permitted to the "alter ego" (passive concern) which is an eligible <br />small business concern when: <br />a) The applicant (passive concern) is a business entity that is <br />organized and operated for profit, whether operating as an <br />individual proprietorship, partnership or corporation; <br />56 <br />