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ELK RIVER ECONOMIC DEVELOPMENT <br />MICRO LOAN FUND POLICY & GUIDELINES <br />I. PURPOSE <br />The Economic Development Authority for the City of Elk River (EDA) recognizes <br />the need to stimulate private sector investment into manufacturing facilities and <br />equipment in order to create new jobs, boost productivity and retain existing jobs for <br />local residents. Additionally, the need exists to encourage investment in the <br />expansion and/or rehabilitation of commercial and retail buildings in order to <br />maintain the economic viability of Elk River's Downtown District . Subsequently, <br />the purpose of this program is to provide low interest, long-term (i. e. greater than <br />one year) loans as incentives for industrial development within the City of Elk 12iver <br />and to encourage commercial and retail business owners in the Downtown District <br />to rehabilitate their existing buildings. <br />II. LOAN PROGRAMS <br />In order to meet the economic and community development objectives of the EDA, <br />two distinct loan programs exist within the Micro Loan Fund to promote business <br />growth in Elk River. <br />Industrial Incentive Program <br />Purpose: The purpose of the Industrial Incentive Program is to encourage <br />industrial and high technology business development that supports <br />the tax base and brings quality jobs to the city. <br />Amount: Up to $100,000 of secondary financing not to exceed 20% of the <br />project cost. <br />Equity: Must have private-sector commitments for 50% of the project cost. <br />Borrower must provide 10% or more of project financing. <br />Rate: Fixed; 2 points below the lowest prime rate published in <br />the Wall Street Journal the day the loan is closed, or 3%, whichever is <br />greater. <br />Term: Financing with a balloon payment in 5-years. The balloon payment <br />must not be longer than the balloon payment of the participating <br />bank. Loans may be amortized up to the following limits: <br />20-years on real estate uses; <br />10-years on equipment uses. <br />~. Extension: In the event that the Borrower is unable to obtain conventional <br />financing to replace the Micro Loan at the end of five years, the loan <br />may be extended up to two additional years at a market rate of <br />interest. <br />Micro Loan Fund Policy & Guidelines Page 2 of 14 <br />Amended November 2006 <br />