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CREDIT CRITERIA <br /> <br />Equitw or Cash Requirements: <br /> <br />Loan applicants must demonstrate an acceptable level of project equity, with a minimum <br />of 10% equity provided by the borrower. Subordinated debt within the same project <br />financing may be considered as additional equity, subject to an intercreditor agreement. <br />All other criteria will apply, including subordinate debt, when calculating debt coverage. <br /> <br />Collateral Re/quirements: <br /> <br />· Loan collateral coverage must be at least 100% of the MCCF loan amount on appraised <br /> value of assets, less all senior debt. <br />· MCCF will consider the following, collateral positions: first security interest, shared first <br /> security interest, subordinated security interest and shared subordinated security interest. <br /> <br />Debt to Worth: <br /> <br />· MCCF will consider financing projects that have a tangible net worth ratio on an actual <br /> and proforma basis of no greater than 10 to 1 (10% project equity or greater). Each <br /> project shall be analyzed on its own merits and its ability to service both existing and <br /> new debt. <br />· MCCF borrowers (real estate holding companies excluded) should have a tangible net <br /> worth of 5 to 1 or less, based upon their most recent financial statements and, on a <br /> proforma basis, reflecting the new proposed debt. <br /> <br />Personal Guarantees: <br /> <br />· Personal guarantees will be required for all owners with 20% or greater ownership in <br /> closely held businesses. <br /> <br />Management Experience & Company Performance: <br /> <br />The MCCF will require that the project have capable, skilled management through <br />experience or expertise in the applicant's industry, either through previous successful <br />business ownership or through appropriate managerial support services. Borrowers <br />having erratic or undocumented earnings, or borrowers having new and unproven <br />management, will require more loan risk sharing by the MCCF member originating the <br />loan. <br /> <br />Repayment Ability: <br /> <br />Applicants must demonstrate adequate historical cash flow showing trends that support <br />debt service coverage of at least 1.1 to 1. Proforma financial cash flows must also <br />support debt service coverage of at least one to one. <br /> <br />2 <br /> <br /> <br />