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ELK RIVER ECONOMIC DEVELOPMENT <br />MICRO LOAN FUND POLICY & GUIDELINES <br /> P,.evised April 2003 <br /> <br />PURPOSE <br /> <br />The Economic Development Authority for the City of Elk Raver ('EDA) recogr~izes <br />the need to sUrnulate private sector investment into manufacraZ-ng facilities and <br />equipment in order to create new jobs, boost productivity and retain ex/sting jobs for <br />local residents. Additionally, the need exists to encourage investment in the <br />expansion and/or rehabilkation of commercial and retail buildings in order to <br />maintain the economic viabili~ of Elk Kiver's central business ctistr/ct. <br />Subsequendy, the purpose of t52s program is to provide low interest, long-term (i.e. <br />greater than one year) loans as incentives for industrial development within the City <br />of Elk River and to encourage commercial and retail business owners in the central <br />business district to rehabilitate their e~stmg buildings. <br /> <br />II. <br /> <br />LOAN PROGRAMS <br /> <br />In order to meet the economic and community development objectives of the EDA, <br />three distinct loan programs exist wkhin the Micro Loan Fund to promote business <br />growth in Elk River. <br /> <br />Supplemental Financing Program <br />Purpose: The Supplemental Financing Program is designed for industrial farms <br /> who have maxim/zed their conventional financing and equity <br /> resources and subsequendy would be unable to complete a project <br /> without EDA assistance. <br /> <br />Amount: <br /> <br />Up to $50,000 of secondary financing (not to exceed 40% of the <br />project cost. <br /> <br />Equity: <br /> <br />Must lave pr/vate-sector commir_ments for 50% of the project cost. <br />Borrower to provide 10% or more of project financing. <br /> <br />Kate: <br /> <br />FLxed; 1 point below the lowest prime rate published in the <br />Wall Street Journal the day the loan is closed, or 2%, wkichever is <br /> <br />greater. <br /> <br />TerlTl' <br /> <br />Financing with a balloon payment in up to 3-years. Loans may be <br />amortized up to the following limits: <br /> 15-years on real estate uses; <br /> 10-years on equipment uses. <br /> <br />Extension: <br /> <br />In r~he event that the Borrower is unable to obt,xin conven6onal <br />financing to replace r.he MScro Loan at ra~e end of three years, the <br />loan may be extended up to rwo addkion~ years at a market rate of <br />interest. <br /> <br />Elk Privet Econormc Development Au~ority <br />Nfic:o Loan Fund Policy & GuideSnes <br /> <br />Page~' o£ $ <br /> <br /> <br />