6.0 EDSR 01-12-2009 - Laserfiche WebLink

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Consider Micro Loan Extension Request -Nicole's Finishing Touch Salon, Inc. December 18, 2008 EDA Finance Committee Page 2 of 2 Background In January 2008, the EDA awarded a $25,000 Micro Loan at 3% interest to Nicole's Finishing Touch Salon, Inc. under the Downtown Business Revitalization Program. Ms. Fox indicated the loan would be used to increase advertising and other promotional activities to assist overcome negative impacts of their delay in relocating their business from Otsego to the Bluffs during the construction. The original terms of the loan were as follows: Term: 2 years Rate: 3 % fixed Structure: Direct Loan with the Elk River Economic Development Authority Security: Personal guaranty Issues for Discussion • Monthly repayment on the loan has been slow and November & December's payment is outstanding • The Micro Loan policy states that in the event that the Borrower is unable to obtain conventional financing to replace the Micro Loan at the end of five years, the loan may be extended up to two additional years at a market rate of interest; the applicant is asking for a one year extension at a 3% interest rate and has been paying on the loan for 8 months 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.