5. EDSR 11-10-2008 - Laserfiche WebLink

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Consider Micro Loan Extension Request -Lake Assault Custom Boats November 3, 2008 EDA Finance Committee Page 2 of 2 The original terms of the loan were as follows: Term: 10 year amortization at 3.25% interest, 3-yr balloon payment Structure: Participation loan with The Bank of Elk River Security: 1y` position lien on equipment Job Goals: Create 3 full-time equivalent jobs at no less than $17.00/hour within 2 years In June 2006 the EDA, upon recommendation of the Finance Committee, approved the company's request fora 2-year extension on the micro loan. The extension was provided at a market rate of interest (8%) per the City's Micro Loan Policy. The company has fulfilled its job goals per the subsidy agreement. The company reports current employment at 9 full-time positions (including owner) and 2 part-time positions at an average wage of $17/hour. Issues for Discussion In June 2004 the Finance Committee and EDA approved several amendments to the Micro Loan Policy & Guidelines. One of the amendments included extending the original loan terms from a 3-year balloon payment to a 5-year balloon payment. The extension period beyond the balloon payment, if borrower is unable to obtain conventional financing, has remained the same as "up to two additional years at a market rate of interest". Therefore the Committee may want to consider the total term on this loan as no different from current micro loan policy. Monthly repayment on the loan has been slow; however the micro loan is not currently in default. Attached is a copy of the loan payment history. An automatic withdrawal may be an option to remedy the situation in the future. In addition, the Committee should take into consideration during its discussion the company's current financial condition, ability to repay the loan, and the EDA's security position. S:\EDA\Micro Loan Fund\LOANS\Lake Assault Custom Boats\11.03.08 Finance Comm Memo.doc