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ITEM # 7. <br /> City of <br /> Elk -�-1 <br /> River <br /> MEMORANDUM <br /> TO: Economic Development Authority <br /> CC: Lori Johnson, Finance Director <br /> FROM: Heidi Steinmetz, Assistant Director of Economic Development <br /> DATE: January 10, 2005 <br /> SUBJECT: Consider Micro Loan Extension — Minnesota Fabrication & <br /> Machine, Inc. <br /> Attachments <br /> • Staff report to EDA Finance Committee dated January 4, 2005 <br /> • • Finance Committee Minutes,January 4, 2005 <br /> • Proposed amortization schedule <br /> Background <br /> In December 2001, the EDA awarded a $50,000, 3.75% Micro Loan to Minnesota Fabrication <br /> &Machine, Inc. The loan was used for the purchase of equipment and the remodeling of the <br /> former Industrial Hardfacing, Inc. building located on Twin Lakes Road. The loan was <br /> structured as a participation loan with First National Bank of Elk River and payments have <br /> been consistent. <br /> Issue <br /> The balloon payment on this loan in the amount of$ 41,732.03 was due December 31, 2004. <br /> The company is eligible for a two-year extension at a market rate of interest,which is currently <br /> about 6.5%. The EDA's security on the loan is first position for the mortgage on the <br /> property. The bank is willing to continue servicing the loan if the EDA approves the two-year <br /> extension. <br /> Prior to the due date of the balloon payment, the company provided the processing fee and <br /> necessary documents for the request,which are attached in the staff report to the Finance <br /> Committee. <br /> Finance Committee Recommendation <br /> • The Finance Committee reviewed the extension request at its January 4, 2005 meeting. The <br /> attached Finance Committee Minutes indicate that the consensus of the Finance Committee <br />