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ELK RIVER ECONOMIC DEVELOPMENT <br /> MICROLOAN FUND POLICY & GUIDELINES <br /> ii. PURPOSE <br /> The Economic Development Authority for the city of Elk River (EDA) recognizes <br /> the need to stimulate private sector investment into manufacturing facilities and <br /> equipment in order to create new jobs,boost productivity and retain existing jobs for <br /> local residents.Additionally, the need exists to encourage investment in the <br /> expansion and/or rehabilitation of commercial and retail buildings in order to <br /> maintain the economic viability of Elk River's Downtown District. Subsequently, <br /> the purpose of this program is to provide low interest,long-term (i.e. greater than <br /> one year) loans as incentives for industrial development within the city of Elk River <br /> and to encourage commercial and retail business owners in the Downtown District <br /> to rehabilitate their existing buildings. <br /> 214. LOAN PROGRAMS <br /> In order to meet the economic and community development objectives of the EDA, <br /> three distinct loan programs exist within the Microloan Fund to promote business <br /> growth in Elk River. <br /> Industrial Incentive Program <br /> Purpose: The purpose of the Industrial Incentive Program is to encourage <br /> industrial and high technology business development that supports <br /> the tax base and brings quality jobs to the city. <br /> Amount: Up to $100,000 of secondary financing not to exceed 20% of the <br /> project cost. <br /> Equity: Must have private-sector commitments for 50% of the project cost. <br /> Borrower must provide 10% or more of project financing. <br /> Rate: Fixed;2 points below the lowest prime rate published in <br /> the Wall Street Journal the day the loan is closed, or 3%,whichever is <br /> greater. <br /> Term: Financing with a balloon payment in 5-years. The balloon payment <br /> must not be longer than the balloon payment of the participating <br /> bank. Loans may be amortized up to the following limits: <br /> 20-years on real estate uses; <br /> 10-years on equipment uses. <br /> Extension: In the event that the Borrower is unable to obtain conventional <br /> financing to replace the Microloan at the end of five years, the loan <br /> may be extended up to two additional years at a market rate of <br /> Page 2of16 P~OMEBED BY <br /> MATURE <br />