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Consider Micro Loan Extension Request -The Waterfall Salon <br />July 8, 2009 EDA Finance Committee <br />Page 2 of 2 <br />Background <br />At its January 14, 2008 meeting the EDA approved a Downtown Business Revitalization <br />Program Micro Loan in the amount of $25,000 for Waterfall Salon and Day Spa (see <br />attached minutes. The loan is structured as a direct loan from the EDA to Waterfall Salon <br />and Day Spa. <br />The original terms of the loan were as follows: <br />Term: 2 years <br />Rate: 3% fixed <br />Structure: Direct Loan with the Elk River Economic Development Authority <br />Security: Personal guaranty <br />Issues for Discussion <br />Monthly repayment on the loan has been slow and March, April, May, June and a <br />portion of February's payments are outstanding <br />The Micro Loan policy states that in the event that the Borrower is unable to obtain <br />conventional 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 interest; the applicant <br />is asking for a one year extension at a 3% interest rate and a 50% reduction in <br />monthly payment <br />Attached is a copy of the loan payment history. In addition, the Committee should take into <br />consideration during its discussion the company's current financial condition, ability to repay <br />the loan, and the EDA's security position. <br />