6.3 EDSR 07-20-2015 - Laserfiche WebLink

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City of Elk River, Minnesota Morrell Trucking Microloan Fund Review June 18,2015 Page 3 7. Loan Security and Guarantee Requirements (Page 8 of Policy) The City's Economic Development Microloan Fund policy states that prior to the City granting a loan to a proposed business,that the proposed project must meet certain loan security requirements. These requirements are: • Applicant must be able to secure the loan by providing the EDA with a minimum of a subordinate mortgage upon the building andlor assets or other approved collateral: • Applicant must demonstrate the financial means to repay the loans,as determined by the Economic Development Authority: • Whenever possible,personal guarantees will be made part of any loan agreement: • Key person life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownership partners: 8. 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:$2,180,545/$200,000 • Sufficient cash e to cover proposed debt service as demonstrated by financial statements and projections:financial information provided by the company indicates that the project will be able to support debt service upon receipt of the requested tax abatement assistance from the City and County in conjunction with this project. • Ability to demonstrate positive net worth: based on receipt of tax abatement assistance in conjunction with the microloan funds allows the project to maintain positive cash flow to support debt service,meet minimum equity requirements and maintain positive net worth. • Letter of commitment from applicant pledging to complete the project during proposed project duration: Provided • Letter of commitment from other financing sources stating terms and conditions of their participation.Provided • Sufficient collateral: Provided