Table of Contents
Federal
PROGRAM DESCRIPTION/PURPOSE:
The U.S. Economic Development Administration can guarantee business loans made through
private financial institutions in order to induce investment and create jobs.
LOAN AMOUNTS:
The maximum guarantee may not exceed 80% of the total project cost.
The maximum dollar amount of the guarantee will normally not exceed $10,000,000 nor be less than
$750,000. The program may be subject to budget cuts, therefore funding is uncertain.
ELIGIBLE APPLICANTS:
The bank is the applicant on behalf of a business. EDA loan
guarantees are typically made on behalf of manufacturing businesses, but some commercial
enterprises may qualify as well.
OTHER FUNDING REQUIRED:
For new business
start-ups, a minimum 25% equity contribution is required. For existing businesses, a minimum
15% equity contribution is required.
OTHER SPECIAL
REQUIREMENTS:
Business applicants must demonstrate they will create or retain a minimum of one job per
$20,000 in EDA loan guarantee assistance.
ALLOWABLE USE OF PROCEEDS:
Land and building acquisition, land improvements, building construction and renovation,
purchase of machinery and equipment, and working capital.
TERM OF LOAN:
Maturity generally may not exceed 5 years for working capital, 10 years for machinery
and equipment, and 15-20 years for real estate.
INTEREST RATE:
Negotiated rate based on the risk of the project and the amount of the guarantee.
A typical interest rate for an 80% guaranteed loan is New York prime, plus 1½%.
As the amount of the guarantee decreases, the interest may increase.
APPLICATION PROCESS:
All inquiries pertaining to the EDA Loan Guarantee
Program should be directed to the following:
U.S. Economic Development
Administration
105 South 7th Street
Liberty Square Building
Philadelphia,
Pennsylvania 19106
(215) 597-4603
PROGRAM DESCRIPTION/PURPOSE:
The U.S. Economic Development Administration provides grants to assist
communities with the funding of public works and development facilities that
contribute to the creation or retention of private sector jobs particularly in
areas of high unemployment and economic distress.
GRANT AMOUNTS:
Maximum grant normally does not exceed $750,000 - $1,000,000. The program
may be subject to budget cuts, therefore funding is uncertain
ELIGIBLE
APPLICANTS:
State or local governments, Indian Tribes, public or private
non-profit organizations.
OTHER FUNDING REQUIRED:
EDA normally requires 50 percent matching funds from the applicant.
OTHER SPECIAL REQUIREMENTS:
Project must benefit long-term unemployed and members of low income
families and must improve opportunities for the successful establishment or
expansion of industrial or commercial plants and facilities.
ALLOWABLE USE
OF
PROCEEDS:
Typical projects include industrial park improvements,
street improvements, water and sewer improvements or other facilities which support
the establishment or expansion of an industrial enterprise.
TERM OF LOAN:
Not Applicable.
INTEREST RATE:
Not Applicable.
APPLICATION PROCESS:
For more information contact:
U.S. Economic
Development Administration
Federal Building
Duluth, Minnesota 55802
(218) 720-5326
PROGRAM
DESCRIPTION/PURPOSE:
Assistance from
the RECD is provided in the form of a loan guarantee whereby the agency contracts to
reimburse the lender for a maximum of 80 percent of principal and interest. Lenders
are responsible for making and servicing quality loans. Applicants apply for loans
through private lenders.
LOAN AMOUNTS:
Business and industrial
loans are limited to a maximum of $10,000,000. Borrowers who want loans of $750,000
or less are advised to apply for an SBA loan guarantee.
ELIGIBLE APPLICANTS:
Any legal entity, corporation, partnerships, including individuals, some
cooperatives and private organizations, and federally recognized Indian tribal groups
are eligible for these guarantees.
OTHER FUNDING REQUIRED:
A minimum
of 10 percent tangible balance sheet equity is required for existing businesses. Balance
sheet equity of at least 20-25 percent will be required for new businesses.
OTHER
SPECIAL
REQUIREMENTS:
Borrowers and lenders must comply with Federal requirements
relating to equal employment opportunity, historic site preservation, flood and mud slide
protection, environmental impact, the Clean Air and Water Act, the Architectural Barriers
Act, and nondiscrimination.
ALLOWABLE USE OF
PROCEEDS:
Construction,
conversion, acquisition and modernization; purchase and development of land, easements,
machinery, equipment and supplies; working capital; certain housing projects; processing and
marketing facilities; start-up capital; and pollution control.
TERM OF LOAN:
Maturity may not exceed 7 years for working capital, 15 years for machinery and equipment,
and 30 years for land, buildings, and permanent fixtures.
INTEREST RATE:
The interest rate may be either fixed or variable and will be determined between the lender
and the borrower and is subject to RECD review and approval.
APPLICATION PROCESS:
All inquiries pertaining to the RECD Business and Industrial Loan Program should be
directed to the following:
RECD
410 Farm Credit Building
375 Jackson Street
St. Paul, Minnesota 55101
(612) 290-3842
Fax (612) 290-3834
PROGRAM
DESCRIPTION/PURPOSE:
The purpose of
this program is to finance business facilities and community development projects in rural
areas.
LOAN AMOUNTS:
Maximum RECD funding is $4 million per intermediary.
Maximum loan to ultimate recipients is $150,000.
ELIGIBLE APPLICANTS:
I
ntermediaries (or borrowers) are private nonprofit corporations, any state or local government,
Indian group, or cooperative. Intermediary Relending Program money is lent to them, which in
turn is re-lent by them to ultimate recipients. The ultimate recipient must not be able to obtain
credit elsewhere.
OTHER FUNDING REQUIRED:
Security can be real or personal
property or pledged security of intermediary or ultimate recipient.
OTHER SPECIAL
REQUIREMENTS:
Service area must be under 25,000 in population.
ALLOWABLE USE
OF
PROCEEDS:
Proceeds may be used for innovative projects; for land, building
construction or repair, equipment; and for working capital, interest feasibility studies,
professional services.
TERM OF LOAN:
The maximum term is 30 years.
INTEREST RATE:
The interest rate to an intermediary is 1%. Rates to ultimate
recipients will be negotiated, with lower rates encouraged.
APPLICATION PROCESS:
All inquiries pertaining to the RECD Intermediary relending program should be directed
to the following:
RECD
410 Farm Credit Building
375 Jackson Street
St. Paul,
Minnesota 55101
(612) 290-3842
fax (612) 290-3834
PROGRAM
DESCRIPTION/PURPOSE:
These are grants for financing and developing small and emerging private businesses with less than $1 million in revenues and which will have less than 50 new employees.
LOAN AMOUNTS:
There is no maximum dollar limit for any one project. Funds can be in the form of a grant or for a revolving loan program.
ELIGIBLE APPLICANTS:
Applicants are public bodies, nonprofit associations and Indian tribes.
OTHER FUNDING REQUIRED:
Project must be in areas:
of less than 25,000 in population
where unemployment rate exceeds the State rate. (Call the Minnesota Department of Jobs & Training: (612) 296-6545.)
Which have a median household income less than the State's total median household income by the 1990 Census.
Where the applicant has substantial experience in administering such programs.
Where a specific industry is
committed to locate on the site.
APPLICATION PROCESS:
All inquiries
pertaining
to the Rural Economic and Community Development Rural Business Enterprise Grants Program
should be directed to the following:
RECD
410 Farm Credit Building
375 Jackson Street
St. Paul, Minnesota 55101
(612) 290-3842
Fax (612) 290-3834
PROGRAM
DESCRIPTION/PURPOSE:
Under the guaranty program, the lender provides
all of the money, and the SBA can guarantee up to $750,000 or 85% of a loan over $155,000,
whichever is less, and 90% of a loan up to $155,000. A small business may have more than one
BA loan, so long as the SBA's share does not exceed $750,000. The SBA charges a 2% fee on the
guaranteed portion of the loan. The fee is subject to change based on size and location of the
loan
LOAN AMOUNTS:
No limit on loan amount provided by the bank. However,
total loan maximum is $500,000
ELIGIBLE APPLICANTS:
Most small businesses
are eligible for SBA financial assistance provided they are independently owned and operated,
meet SBA's size requirements and can show they are unable to obtain private financing on reasonable
terms without SBA assistance.
OTHER FUNDING REQUIRED:
An applicant must have
an adequate capital investment in their own business. Typically, an applicant should inject 30%
to 45% of the total funds needed to start a new business. For existing businesses, SBA uses
industry standards and the track record of the applicant's business. SBA considers all credit
factors before making a decision.
ALLOWABLE USE OF
PROCEEDS:
A business
may borrow for anything on the balance sheet such as inventory, receivables, land, buildings,
machinery, equipment, furniture, fixtures, autos, trucks, and accounts payable. Funds may also
be used to purchase a business.
TERM OF LOAN:
Maturity may not exceed 7 years for working capital, 10 years for machinery and equipment
and 25 years for real estate.
INTEREST RATE:
Maximum interest rate the bank
may charge is 2 1/4% over prime for loans less than 7 years and 2 3/4% over prime for loans of 7
years or longer. Prime rate is that which is published in the Wall Street Journal.
APPLICATION PROCESS:
All inquiries pertaining to the SBA 7a Loan Guarantee Program
should be directed to your bank of account.
For more information contact:
U.S.
Small Business Administration
610 C Butler Square Building
100 North Sixth Street
Minneapolis, Minnesota 55403
(612) 370-2324
PROGRA
M
DESCRIPTION/PURPOSE:
Zero interest loans and grants are provided to promote rural
economic development and/or job creation projects, including, but not limited to, project
feasibility studies, start-up costs, incubator projects, and other reasonable expenses for
the purpose of fostering rural economic development.
LOAN AMOUNTS:
The
minimum size of a zero interest loan or grant shall be $10,000 and the maximum size of a zero
interest loan or grant shall be $400,000.
ELIGIBLE APPLICANTS:
Zero interest
loans and grants may be made to any electric or telephone cooperative that is not delinquent on
any Federal debt or in bankruptcy proceedings, both as determined by the Administrator.
Loans or grants are made to a Rural Electric or Telephone Cooperative on behalf of
a specific development project or business. The project receives the proceeds which are
then paid back to the Cooperative and RBCDS.
OTHER FUNDING REQUIRED:
No specific amount required. However, this is a competitive program and one of the selection
factors is the amount of supplemental funds provided to the project from other sources.
OTHER SPECIAL
REQUIREMENTS:
This is a competitive program due to the limited nature of the funding. The
selection and approval of applications are based on certain selection factors including
job creation, economic need of the area from which the application was generated, supplemental
funding, credit and other factors.
ALLOWABLE USE OF
PROCEEDS:
Any
use promoting rural economic development and/or job creation including, but not limited to
start-up costs, project feasibility studies, incubator projects and other reasonable expenses.
TERM OF LOAN:
Repayment terms are based on the nature of the project.
Ordinarily, the term shall not exceed 10 years.
INTEREST RATE:
Zero
percent interest.
APPLICATION PROCESS:
All inquiries pertaining to the
Rural Business and Cooperative Development Service Economic Development Loan and Grant Program
should be directed to your respective Electric or Telephone Cooperative or:
United Power
Association
Business Development
Box 800
Elk River, MN 55330
(612) 241-2249
1-800-442-3013
U.S. Small Business Administration
Low Documentation Loan Program (LowDoc)
For Business Loans up to $100,000
PROGRAM
DESCRIPTION/PURPOSE:
The Low Documentation Loan Program (LowDoc) focuses on the strength of character and
credit of the applicants. No predetermined percentage of equity is required. A lack of adequate
collateral is not a determining factor. Primary considerations are:
1. Willingness to
pay debts, as indicated by credit history. Co-signers may be considered if applicants have no
credit history.
2. Historical or expected earnings evidencing repayment ability.
3.
The requested financing provides the business a good chance of achieving success.
Lenders
which have executed or which do execute the SBA Guaranty Agreement (SBA Form 750) and the Lender's
Registration may participate in the LowDoc Loan Program at the discretion of the local field
office.
LOAN AMOUNTS:
Under this program, the total outstanding balance
of all SBA loans to one customer is limited to $100,000.
ELIGIBLE APPLICANTS:
Business applicants must meet SBA's normal eligibility requirements as to type of
business. To be eligible as to size, the business must have average annual sales for the
preceding three fiscal years of $5,000,000 or less and employ 100 or less individuals,
including the owner, partners, or principals.
OTHER SUBMISSION REQUIREMENTS:
Loans up to $50,000: A completed application form.
Loans $50,000 up to
$100,000:
1. A completed application form.
2. Lender's internal loan report,
including cash flow analysis and pro forma balance sheet.
3. Income tax returns for the last
three years (Schedule C's or the front page of corporate returns).
4. Personal
financial statements for all obligors and guarantors, if any.
OTHER SPECIAL
REQUIREMENTS:
Lenders are expected to use their normal levels of analysis and
approval authority.
Applications with an affirmative response as to criminal
history will not be processed under LowDoc but may be considered under SBA's regular guaranty
loan program. Lenders must assure themselves that negative responses are accurate for all
partners or principals.
Applications for the purchase of an existing business
must include a copy of the terms of sale, financial statements on the existing business, a
statement on the benefits the business receives as a result of the change of ownership, and a
statement as to the relationship between the buyer and the seller.
Comment on history of any debt(s) owed to Lender which will be refinanced by the proposed loan
and place a transcript of said debt(s) in the loan file.
Comment on the
financial condition of affiliates and the possible impact on the applicant business.
Obtain current credit reports for the business, the owners, and all
guarantors and personal financial statements for the owners and all guarantors.
A
ll owners of 20% or more of the business will be required to personally guarantee the loan.
LowDoc loans will be closed in the same manner as SBA's regular
guaranty loans.
In the event of default, the participating lender will be
required to liquidate the assets prior to requesting that SBA honor its guaranty.
ALLOWABLE USE OF
PROCEEDS:
Loan proceeds may be used for business
purposes as allowed under the regular SBA guaranty loan program with the exception that
funds to pay debt owed to the participating lender may not exceed 25% of the total loan request.
The refinanced loan must be current and have a history of currency and all collateral securing it
must be pledged on the new loan. Loan proceeds may not be used for distribution to owners or
principals or for payment of personal debt. Lender must obtain proof that credit card and
other debt refinanced is business related.
TERM OF LOAN:
Loan
maturities are generally:
up to 7 years for working capital
up to 10 years for equipment
up to 25 years for real estate
INTEREST RATE:
SBA's interest rate
policy for regular 7(a) loans applies to applications for LowDoc loans.
APPLICATION
PROCESS:
All inquiries should be directed to:
U. S. Small Business
Administration
LowDoc Loans
100 N Sixth St. Suite 610-C
Minneapolis, MN
55403-1563
(612) 370-2324
fax (612) 370-2355
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Created June 1995, Last revised June 1995