7.3. SR 12-15-2014 - Laserfiche WebLink

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City of Elk River, Minnesota Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review December 15, 2014 Page 5 Whenever possible, personal guarantees will be made part of any loan agreement: The applicant agrees to provide a personal guarantee, if requested. Key person life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownership partners: The applicant does not plan to add additional life insurance, but already has$3.5 million dollar policy and would add the EDA as a beneficiary ahead of his wife, if requested. B. Timing of Project Expenses (Page 8 of Policy) To be regulated if funding is approved and determined to be used for any improvements of the existing building. 9. Procedural Guidelines for Application and Approval (Page 8 of Policy) To be regulated if funding is approved and determined to be used for any improvements of the existing building. The EDA Finance Committee is asked to evaluate the project application based on the following criteria a. Project design: evaluation of project design will include review of proposed activities, time lines and a capacity to implement b. Financial feasibility: availability of funds, private involvement,financial packaging and cost effectiveness • Appropriate ratio of private funds to microloan funds: Stonesthrow Companies, LLC is intending to acquire the existing building that Coin-Tainer Co., LLC is currently occupying and continue leasing that facility to Coin-Tainer Co., LLC and the other existing tenants. Acquisition of the building is estimated to be$2.6M and Stonesthrow Companies, LLC is planning to finance the purchase through a contract for deed with the microloan funds of$200,000 used to assist with the purchase. The applicant would use private funds to finance of$2.4M and microloan funds of$200,000 to acquire the building, with a ratio that meets the minimum criterion(50 96)of the City's policy. • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections: Stonesthrow Companies, LLC has requested assistance from the City of Elk River to assist with acquisition of the facility and reduce the amount of acquisition costs to be financed through the contract for deed. The contract for deed is amortized at a higher interest rate than the City microloan; therefore the microloan provides a lower interest alternative for a portion of the acquisition costs. Reducing the annual debt payments through the lower-interest loan provides adequate cash flow to cover debt service over the first 5 years. The applicant anticipates refinancing and/or selling the building at the time the obligations are due to provide sufficient capital for full repayment. • Ability to demonstrate positive net worth: As stated previously, the applicant has positive net worth as of October 2074 and has indicated relocation of business operations to Elk River and consolidation of certain operations following the fire in Milaca will result in long-term positive net worth for the company.