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Springsted Incorporated <br /> 380 Jackson Street, Suite 300 <br /> Springsted Saint Paul,MN 55101-2887 <br /> Tel: 651-223-3000 <br /> Fax: 651-223-3002 <br /> www.springsted.com <br /> DRAFT MEMORANDUM <br /> TO: Amanda Othoudt, Economic Development Director <br /> FROM: Mikaela Huot,Vice President/Consultant <br /> DATE: June 23,2015 <br /> SUBJECT: 19228 LLC(Promo Products)—Micro loan Fund Application for Extension Review <br /> Summary <br /> The City of Elk River received a request for an extension of the Economic Development Microloan Fund from 19228 <br /> LLC (Promo Products). The applicant initially received the loan in 2011 and the maturity date is coming due in <br /> January 2016 (maximum 5 year term). Because the term of the loan is coming due, the applicant has made efforts to <br /> refinance the loan as a condition of the Microloan Fund program. First National Bank of Elk River was approached for <br /> refinancing and has denied due to loan position and current economic conditions. The Microloan from the EDA is <br /> subordinate to both the Bank mortgage and SBA 504 loan. SBA 504 mortgage guidelines do not allow the Bank to roll <br /> the EDA loan amount as a refinance into the first mortgage loan and Bank guidelines do not allow the Note to be <br /> refinanced into third position behind the SBA 504 loan. The Bank has recommended the company secure its cash for <br /> future working capital needs associated with company growth and request an extension of the existing loan with the <br /> EDA. <br /> Conclusion <br /> Review of current financial statements and profit and loss statements (2014) indicate the company has positive <br /> retained earnings and net income. Under the terms of the Microloan Fund policy, an extension of up to two additional <br /> years at market rate of interest could be granted upon approval. It is recommended the EDA consider the extension of <br /> the Microloan for the allowable 2 year period. It would be the intent with the extension of the loan that the company <br /> would continue to demonstrative positive retained earnings and net income and secure cash and credit for repayment <br /> and/or refinancing of the original loan. <br /> Public Sector Advisors <br />