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ITEM ~ 7. <br />REQUEST FOR ACTION <br />To Item Number <br />Economic Develo ment Authori <br />Agenda Section Meeting Date Prepared by <br /> Catherine Mehelich, Director of <br /> Economic Develo ment <br />Item Description Reviewed by <br />Consider Micro Loan Extension Request -Badger Ventures, <br />LLC (Gradient Technology) Reviewed by <br />Action Requested <br />Consider approval of a 2-year extension on the Badger Ventures, LLC Micro Loan at 6.25% fixed market <br />rate interest and waive the $500 Micro Loan extension processing fee. <br />Background/Discussion <br />In May 2005 the EDA awarded a $100,000 low-interest Micro Loan to Badger Ventures, LLC to finance <br />a portion of the company's relocation and expansion to Elk River. The company's Micro Loan has <br />recently reached its 5-year maturity at the discounted interest rate of prime minus 2%. <br />The company is requesting the EDA's consideration of a 2-year extension on the $40,000 principal <br />balance due. The attached City Micro Loan Policy (page 7) allows fora 2-year extension at a market rate <br />of interest. In addition the bank has provided staff evidence that refinancing through the bank is not an <br />option due to the bank's loan-to-value guidelines. <br />Typically extension requests are reviewed by the EDA Finance Committee for recommendation to the <br />EDA. However due to the April maturity of the Micro Loan staff is recommending the EDA directly <br />review and approve the request. Since the Micro Loan is structured as a participation loan with the bank <br />handling the administrative processing, staff is also recommending the EDA waive the $500 fee. <br />Financial Impact <br />The principal balance due on the subject micro loan is $40,000. The company has always been current on <br />its loan payments. The Micro Loan is secured by a personal guarantee and 2nd position mortgage. <br />Attachments <br />• Correspondence from Gradient Technology dated April 8, 2010 <br />• City of Elk River Micro Loan Fund Policy <br />Action Motion by Second by Vote <br />Follow Up <br />S:\Comrnunity Development\Economic Development\Micro Loan Fund\LOANS\Badger Ventures\Action Requested 4.12.10.doc <br />