6.0. EDSR 08-11-2003 - Laserfiche WebLink

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C m.NNESOTA COMMUNITY CAPITAL FUND EXHIBIT B: LOAN CRITERIA FINANCING POLICIES CREDIT CRITERIA Loan Amounts: Equity or Cash Requirements: ■ $50,000 minimum • Loan applicants must demonstrate an acceptable level • $2,500,000 maximum of project equity, with a minimum of 10% equity provided by the borrower. Subordinated debt within Eligible Projects: the same project financing may be considered as additional equity,subject to an intercreditor agreement. • Funded project must be within a member's area of All other criteria will apply,including subordinate debt, operations. when calculating debt coverage. • Borrower may be a for-profit business entity,non-profit entity,cooperative,or local unit of government. Collateral Requirements: • A financial institution must be a participant in the project financing. • Loan collateral coverage must be at least 100%of the MCCF loan amount on appraised value of assets, less Allowable Use of Proceeds: all senior debt. • MCCF will consider the following collateral positions: • MCCF financing assistance may include, but is not first security interest, shared first security interest, limited to: fixed assets, including land and building subordinated security interest and shared subordinated purchase, building construction, leasehold security interest. improvements and renovations;acquisition,renovation or moving machinery and equipment; and working Debt to Worth: capital loans secured by fixed assets with fixed • repayment schedules(not lines of credit). • MCCF will consider financing projects that have a • Loans may not be used to refinance existing debt. tangible net worth ratio on an actual and proforma basis of no greater than 10 to 1 (10% project equity or Ineligible Use of Proceeds: greater). Each project shall be analyzed on its own merits and its ability to service both existing and new ■ Speculative real estate developments. debt. • Purchase of equity positions in business enterprises. • MCCF borrowers (real estate holding companies excluded)should have a tangible net worth of 5 to 1 or Interest Rates: less,based upon their most recent financial statements and,on a proforma basis, reflecting the new proposed • Adjustable and fixed rate loans are available,with rates debt. determined by the MCCF member originating the loan. Personal Guarantees: Loan Term Length: • Personal guarantees will be required for all owners with • The term of each loan will be determined on a case-by- 20%or greater ownership in closely held businesses. case basis,with the primary factor being the collateral offered.Loans secured by real estate will generally not Management Experience&Company Performance: exceed 20 years, and loans secured by machinery and equipment will generally support a loan term of up to • The MCCF will require that the project have capable, 10 years,not to exceed the depreciated life of the asset skilled management through experience or expertise in being financed. When possible, the MCCF loan will the applicant's industry, either through previous coincide with the term of the participating bank loan, successful business ownership or through appropriate including any balloon maturity provisions. managerial support services. Borrowers having erratic or undocumented earnings, or borrowers having new Fees and Charges: and unproven management,will require more loan risk sharing by the MCCF member originating the loan. • A 1.75% loan origination fee will be charged to all MCCF borrowers. This fee will be assessed only for Repayment Ability: approved loans, but must be paid at or prior to loan closing. • Applicants must demonstrate adequate historical cash • A 0.5% loan underwriting fee shall be paid by the flow showing trends that support debt service coverage • borrower at loan closing. of at least 1.1 to 1. Proforma financial cash flows must ■ Borrowers are responsible for paying all legal and other also support debt service coverage of at least one to loan closing costs incurred by MCCF. one.