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ITEM # 7. <br />of <br />ver <br />MEMORANDUM <br />TO: Economic Development Authority <br />FROM: Catherine Mehelich, Director of Economic Development <br />DATE: January 11, 2010 <br />SUBJECT: Discuss EDA Micro Loan -Ethanol Technology of MN, LLC <br />In August 2008 the EDA approved a Micro Loan in the amount of $74,000 for Ethanol <br />Technology of MN, LLC to assist in the purchase of equipment and complete remodeling <br />for the expanded business venture. The term of the loan is a 10-year amortization; 5-year <br />balloon payment. The rate is fixed at 3%. The loan is secured by a 2"`~ position lien on <br />equipment, inventory, accounts receivable, real estate and personal guarantee. In addition, <br />the company is required to create 7 fulltime positions at $15/hour wages within 2-years. <br />The Micro Loan is structured as a participation loan with First National Bank of Elk River. <br />The bank has advised staff that the borrower is in default on the loan payments and that the <br />bank intends to pursue legal action for collections on its outstanding loan with the borrower. <br />The balance due on the EDA loan is $67,376.34. The bank has inquired if the EDA would <br />like to pursue legal action for collection of the micro loan and to be represented by the <br />bank's counsel. Staff would like the EDA's authorization before responding to the bank. <br />An alternative option for the EDA to consider is negotiating a restructure of the loan with <br />the borrower. <br />