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South Central Ozark
Regional Development Company (SCORDC)
Microenterprise Revolving Loan Fund (ME-RLF)
ME-RLF Application
ME-RLF Summary
The
Microenterprise Loan Fund Program was approved in August 2000 through the
Missouri Community Development Block Grant Program.
The purpose is to promote business and create jobs primarily for persons in
low to moderate income brackets.
RLF Participation
Requirements
Entrepreneurs who
wish to avail themselves of the economic benefits of the Microenterprise RLF
must be residents of the South Central Region. Resolutions of support and
membership dues of their resident city or county must be current prior to
participation in the loan fund.
Minimum ME-RLF
Threshold Criteria
- One full-time job created per
$15,000.00 of RLF proceeds;
- At least 51% of the new jobs
to be created must be taken by Low to Moderate Income (LMI) persons;
- An RLF funding limit of 70%
of total project cost;
- Maximum loan amount of
$25,000;
- Must obtain, in writing, firm
commitment from other private lender(s) participating in project;
- Must obtain, in writing, firm
commitment from private sector participant;
- Loans to a business with less
than five (5) existing employees, including owners;
- Payment of one-and-one half
(1 1/2) percent loan origination fee on the RLF portion of the loan at
loan closing.
Program Overview
SCOCOG's
Revolving Loan Funds administered under SCORDC is one of several Economic
Development Administration (EDA) and Community Development Block Grant (CDBG)
public investment tools available to assist distressed areas.
An RLF is a pool of money used by eligible recipients for the purpose of
making loans to achieve certain economic benefits. As loans are repaid by the
borrowers, the money is returned to the fund to make other loans. In that
matter, the fund becomes an ongoing or "revolving" financial tool.
Revolving Loan Funds are not a substitute for conventional lending sources;
RLFs are designed to fill gaps in existing local financial markets and provide
or attract capital which otherwise would not be available for economic
development.
The primary goal of the RLF is private sector job creation or retention.
Priorities Established
by CDBG
- Lack of other microenterprise
or small business assistance in the area
- Program service area and
involvement of local government
- Design and management of the
local microenterprise program
- Training component and
qualifications of trainers
- Organizations involved in the
implementation
- Organization involved in the
time frame
Eligible Use of Funds
- Acquisition and
rehabilitation of an existing building
- Construction of a new
building
- Infrastructure improvements
- Site preparation
- Land acquisition
- Machinery and equipment
- Working capital
- Educational Training
Interest Rates
SCORDC can make
loans to eligible borrowers at interest rates and under conditions determined
by SCOCOG to be the most appropriate in achieving the goals of the RLF and in
accordance with the following:
- The minimum interest rate is
the current Money Center Bank Prime Rate.
Collateral
Requirements
In the
determination of collateral requirements, SCORDC will consider the merits and
potential economic benefits of each request. When appropriate and practical, RLF
financing may be secured by an assignment of rights in assets of assisted
firms as follows:
- In order to encourage
financial participation in a direct fixed asset loan project by other
lenders and investors, the RLF loan lien position may be subordinated to
other loans in connection with the project.
- In projects involving direct
working capital loans, the RLF will normally obtain collateral such as
liens on inventories, receivables, fixed assets and/or other available
assets of borrowers. Such liens may be subordinate only to existing
liens of record and other loans involved in the project.
- In addition to the above
types of security, the RLF may also require security in the form of
assignments of patents and licenses, the acquisition of hazard and other
forms of insurance, and such additional security as SCORDC determines in
necessary to support the RLF's exposure.
- RLF loan requests submitted
by closely held corporations, partnerships, or proprietorships dependent
on the continuing success of certain individuals will ordinarily be
expected to provide life insurance on key person and assign to the RLF.
- Personal guarantees may also
be required from principal owners, as appropriate.
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