Region XII Development Corporation administers three Revolving Loan Funds to encourage the development of new businesses and expansion of existing businesses in Audubon, Carroll, Crawford, Greene, Guthrie, and Sac Counties. The Revolving Loan Funds consist of funding from USDA Rural Development, the U.S. Department of Commerce Economic Development Administration (EDA), and the six counties. Priority consideration for lending will be given to businesses that employ or will employ less than 25 individuals. Manufacturing, service, and retail businesses that plan to locate or expand within the six--county region are eligible to apply for a loan. Projects involving retention of jobs within the region are also eligible for assistance. This sheet provides specific information on the requirements of the Revolving Loan Fund program.
Applicant Requirements All applicants for Revolving Loan Funds must satisfy the following minimum requirements to be eligible for assistance:
- The business must be located in Audubon, Carroll, Crawford, Greene, Guthrie, or Sac Counties
- One permanent job must be created or retained for every $10,000 of funds loaned ($5,000 per job is desired), and the RLF loan can be no more than 40% of the total project cost
- The minimum private (business/owner) investment or equity in the project is 10% of the project cost
- The minimum amount of conventional (bank) financing in the project is 50% of the project cost
- There must be evidence that program loan funds are necessary to make the proposed project feasible (i.e., additional bank financing is not available, all other sources have been “maxed-out,” etc.)
- There must be evidence that the project is feasible and that the business requesting assistance can continue in the foreseeable future (future financial projects for 3 years are required with the application)
- The project must be eligible under USDA-RD guidelines to receive funding
- There must be evidence that no significant negative land use or environmental impacts will occur as a result of the project (an environmental assessment may be required, which may take up to 60 days)
- Employees of USDA-RD or persons related to employees of USDA-RD are not eligible for lending from the IRP or RBEG funds
- A non-refundable application fee equal to 1.5% of the loan amount requested must be submitted with the application.
- Applications are typically due no later than the 25th of each month, and will be reviewed the month following. However, potential applicants should contact Region XII staff prior to the 15th of the month to ensure applications are received in time to permit timely review.
Loan Terms The interest rate for loans will be:
6.5% or 1.5% below current prime rate (whichever is higher) for loans made from the IRP fund; and/or
4.0% or 4.0% below current prime rate (whichever is higher) for loans made from the EDA or RBEG funds.
The interest rate offered will depend on each individual project. The maximum term of a loan will be ten years.
The minimum size of a RLF loan will be $5,000, while the maximum loan shall not exceed $187,500. The maximum loan amount may be adjusted if deemed necessary or appropriate for individual projects. All loans will carry fixed, simple interest rates for the term of the loan. Loan extensions shall be considered in extreme circumstances. Amortization of the loan will generally be made in equal monthly installments. The goal will be to attain first position on loans with discretionary ability by the loan review committee to negotiate lesser positions if the project requires it and the project is feasible. Only a prior written approval will schedule payment to be subordinated to the primary lender. These policies will be unilaterally followed for both working capital and fixed asset loans. A moratorium on repayment of principal payments may be approved in cases of documented need and will not exceed 12 months. Acquisition and construction loans will require mortgages, and M & E and working capital loans will require UCC filings. All applicants will be required to provide personal guaranties. Additional forms of security may be required, and will be determined on a project-by-project basis.
Other Standards and Provisions - Acceptable uses of program funds include land acquisition, building construction/renovation, equipment purchase/refurbishing, and purchase of inventory. Program funds may also be used for working capital, but working capital loans will be limited to a maximum of 50% of available program funds.
- Prohibited activities include requests that are purely speculative in nature (i.e., land banking, speculative building construction, etc.) and production agriculture.
- The loan committee will require all loan candidates to provide written evidence that private financing has been secured in a sufficient amount (minimum 50% of project total) to carry the private portion of the loan package. The loan committee will also require the loan candidate to provide a minimum of 10% equity towards project costs dependent on the type of loan and experience with the type of business.
- All loan requests accepted for processing will be subject to environmental review and when appropriate, a cultural resources assessment to ensure compliance with all local, state, and federal requirements prior to disbursement of funds. This requirement may delay disbursement of funds.
- A minimum of 20% of the jobs created with program assistance will be provided to new hires at or below the poverty level (for loans made with the IRP fund).
- A minimum of 30% of the businesses assisted with program funds will be owned by persons in an underrepresented group, including women, minorities, or persons with disabilities.
- Loan projects will be monitored on an annual basis during the term of the loan to inspect assets held as collateral, and to discuss the success of the business and employment targets. Loan recipients will be required to report job creation quarterly, to carry adequate insurance to cover pledged collateral (with RDC named as loss-payee), and to allow the COG access to all records.
Selection Criteria Loans will be reviewed based on:
- Number of jobs created/retained versus amount of funds requested (NOTE: jobs must be created within a two year period)
- Ratio of Region XII Revolving Loan funds to other funds in project
- Need and Impact of Project (consideration includes local employment conditions, other resulting new economic activity, utilization of other available programs/incentives, project schedule, property tax enhancement/effect)
- Priority will be given to projects that will create manufacturing jobs and projects that will add value to Iowa resources.
Applications Applications can be obtained from the County Economic Development Directors and Region XII Council of Governments. Region XII COG staff will be responsible for basic loan packaging for submission to the Region XII Development Corporation Loan Review Committee for review. Applications are due the 25th of each month, and will be reviewed the month following submission to Region XII COG. Applications will only be reviewed if they are complete and meet specific requirements of the RLF program. Additionally, applications will not be reviewed until the application fee has been paid. Applications will be reviewed by the Loan Review Committee, who will make recommendations on funding and terms to the Region XII Executive Board who will make final review of all applications and terms.
For more information, please contact one of the following economic development officials:
Region XII Council of Governments:
Joe Behrens, Local Assistance Director
Phone: (712) 792-9914
e-mail: Region |
