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ELK RIVER ECONOMIC DEVELOPMENT <br />MICRO LOAN FUND POLICY & GUIDELINES <br /> Revised April 2003 <br /> <br />PURPOSE <br /> <br />The Economic Development Authority for the City of Elk River (EDA) reco~m'fizes <br />the need to stimulate private sector investment into manufacturing facilities and <br />equipment in order to create new jobs, boost producmdty and retain e,,dstmg 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 xfability of Elk River's central business district. <br />Subsequendy, the purpose of this' program is to provide low interest, long-term (i.e. <br />greater than one year) loans as incentives for industrial development, within the City <br />of Elk River and to encourage commercial and retail business owners in the central <br />business district to rehabilitate their existing buildings. <br /> <br />II. <br /> <br />LOAN PROGRAMS <br /> <br />In order to meet the economic and community development objectives of the EDA, <br />tKree distinct loan programs exist within the Micro Loan Fund to promote business <br />growth in Elk River. <br /> <br />Supplemental Financing Program <br />Purpose: The Supplemental Financing Program is desi~o-ned for industfi,-d firms <br /> who have maximized their conventional financing and equity <br /> resources and subsequently would be unable to complete a project <br /> without EDA assistance. <br /> <br />Amount: <br /> <br />Up to $50,000 of secondary financing (not to exceed 40% of the <br />project cost. <br /> <br />Equity: <br /> <br />Must have private-sector commitments for 50% of the project cost. <br />Borrower to provide 10% or more of project financing. <br /> <br />Rate: <br /> <br />Fixed; 1 point below the lowest prime rate published in the <br />Wall Street Journal the da3, the loan is closed, or 2%, whichever is <br />~o-reater. <br /> <br />ZerlTl: <br /> <br />Financing with a balloon payment in up to 3-years. Loans may be <br />amortized up to the following limits: <br /> 15-years on real estate uses; <br /> 1 O-years on eqmpment uses. <br /> <br />Extension: <br /> <br />In the event that the Borrower is unable to obtain conventional <br />financing to replace the Micro Loan at the end of three years, the <br />loan naa}, be extended up to m~o additional years at a market rate of <br />interest. <br /> <br />Elk River Economic Development Authom3, <br />Micro Loan Fund Polic3, & Gmdelmes <br /> <br />Page 2 of 8 <br /> <br /> <br />