5.3. EDSR 02-10-2003 - Laserfiche WebLink

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