revolving loan fund program


THE PARKERSBURG REVOLVING LOAN FUND PROGRAM SUMMARY

The Parkersburg Revolving Loan Fund (hereinafter referred to as Loan Fund) will be handled by the Parkersburg Revolving Loan Fund Loan Review Committee (hereinafter referred to as Review Committee) with final approval of any loans to be given by the Parkersburg Economic Development Board of Directors (hereinafter referred to as the Board). The Loan Fund provides supplemental financing to small and medium sized businesses located within Parkersburg. Projects must either create or retain jobs. Program funds can be used for most aspects of start-up or expansion projects and, in some cases, may include needed working capital. Funds cannot be used to refinance existing debt or subsidize payments on existing debt. The primary consideration for financial participation by Parkersburg is the creation or retention of jobs. The application process has been streamlined to reduce the amount of information that must be submitted. Financial information that generally must be submitted to a local government under regular programs has been substantially reduced.

1. LOAN PROGRAM OBJECTIVES

The Loan Fund will be used by the Review Committee to make loans to accomplish the following:

2. THRESHOLD CRITERIA

All applicants for the Loan Fund must satisfy the following minimum requirements to be eligible for assistance.

  1. A target ratio of one permanent job created or retained for every $5,000.00 of loan funds;
  2. A target of fifty-one percent (51%) of the permanent jobs created or retained by the proposed project by low and moderate income individuals;
  3. Jobs created as a result of other jobs being displaced elsewhere in the state will not be considered new jobs for the purpose of evaluating the application for assistance;
  4. Loan funds shall provide no more than thirty-five percent (35%) of the financing for any project, up to a maximum of $50,000.00;
  5. There must be evidence of adequate private equity;
  6. There must be evidence that loan funds are necessary to make the proposed project feasible;
  7. There must be evidence that the project is feasible and that the business requesting assistance can continue as a “going concern” in the foreseeable future without additional or ongoing assistance;
  8. There must be evidence that there will be no significant negative impacts on other businesses or employers in Parkersburg;
  9. There must be evidence that no significant negative land use or environmental impacts will occur as a result of the project.

All applicants will be required to certify to the Review Committee and the State of Iowa that they will comply with the following requirements, if applicable:

  1. The Civil Rights Act of 1964 (PL 88-353 and Title VIII of the Civil Rights Act of 1969 (PL 90-284);
  2. Title I of the Housing and Community Development Act of 1974, as amended;
  3. Age Discrimination Act of 1975;
  4. Section 504 of the Rehabilitation Act of 1973;
  5. Davis-Bacon Act, as amended (40 U.S.C. 276a-176a-5) where applicable under Section 110 of the Housing and Community Development Act of 1974, as amended;
  6. 24 Code of Federal Regulations part 58;
  7. National Environment Policy Act of 1969;
  8. Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1979, Title II & Title III;
  9. Hatch Act (5 U.S.C. Chapter 15).

3. ELIGIBLE AREA

The location of each Loan Fund project must be within Parkersburg. Any Loan Fund loan must be immediately repaid, including outstanding principal and interest, if the project activity is moved outside the eligible area during the life of the loan. Any transfer of majority ownership by the borrower must be reviewed by the Administrator and the Review Committee, and the assumption of an outstanding loan reapproved by resolution of the Board.

4. ELIGIBLE USES

Acquisition of land and/or buildings; plant construction; building conversion or expansion; leasehold improvements; purchase of machinery and equipment; and, under certain circumstances, capital for basic inventory. Financial assistance is not available for refinancing existing debt or subsidizing payment on existing debt.

5. ELIGIBLE APPLICANTS

Applicant must be the owner or purchaser of the business or his/her duly authorized representative. Only for-profit businesses engaged in industrial or service enterprises are eligible.

6. FUNDING CYCLE

Applications may be submitted at any time and will be reviewed on a continuing basis.

7. EVALUATION PROCEDURES

Applications for assistance under the Loan Fund will be submitted to the Review Committee, c/o Parkersburg Economic Development, P. O. Box 489, Parkersburg, IA 50665. The Review Committee will have thirty (30) days to review the application and meet with the applicant. Incomplete applications will be returned with deficiencies noted and may be resubmitted.

The Review Committee shall review loan applications, assist the Administrator with establishing terms of each loan and may make recommendations as to whether or not a loan should be made. The Review Committee shall review the loan portfolio and make recommendations to the Administrator as to the changes in the program, objectives, priorities, loan standards and financial policies. The Review Committee shall review “conflict of interest” situations and determine whether or not a loan should be made.

The Board must, by resolution, approve any and all loans made from the Revolving Loan Fund. It is not intended the Board arrange loans or loan conditions, rather the Board will exercise final approval authority. The terms and conditions of the loan will be developed by the Review Committee with a formal recommendation to the Board. Final details of the loan package will be detailed in the Loan Agreement.

The Review Committee may:

  1. Submit the application to the Board with a recommendation for approval and suggested loan terms.
  2. Return the proposal to the applicant for further information or clarification.

Upon receipt of the application from the Review Committee, the Board will review the proposal at its next regular meeting. If timing is a critical factor in the proposal, the Board may call a special meeting to consider the application. The Board may approve the loan and terms of the agreement, disapprove the application, or defer action until additional information is available. A public hearing consistent with Iowa Code will be held in conjunction with the Board’s review of each proposal.

8. RATING CRITERIA

The following rating system will be used to rank applications for the Loan Fund.

  1. Number of jobs per funds requested; jobs to be created must be within two-year period,
  2. Percent of funds other than Revolving Loan Funds in the project, 
  3. Need for and impact of the project; consideration will include local employment conditions, resultant new economic activity, quality of jobs, project schedule, property tax enhancement and other effects on the County tax base.

The overall reliability and feasibility of application material will be considered.

9. APPLICATION INFORMATION

The Review Committee will utilize the Butler County revolving Loan Fund, Small Business application forms.

All sections must be completed before a request can be considered. Applicants will be provided with a list of all required documents and a copy of the administrative procedures.

The applicant must agree to allow the Review Committee to research the company’s history, make credit checks, contact the company’s financial institution, and perform other related activities necessary for the reasonable evaluation of the application. In the event inaccuracies, omissions, or errors are found, the Review Committee will have the discretion of rejecting the application or rerating it based on correct information.

10. LOAN AGREEMENT

If a proposal is approved for funding by the Board, the applicant will sign a loan agreement with Parkersburg Economic Development. This agreement, at a minimum will establish the following:

  1. The interest rate of the loan, whether it is fixed or variable, and the terms of its variability;
  2. The term of the loan;
  3. The frequency of the payments;
  4. Penalties for the late payment;
  5. Penalties for failure to meet job creation or retention goals.

Loan Funds shall be secured by mortgages and/or liens against fixed assets. Such mortgages and/or liens may be subordinated to conventional bank financing. Other security including personal guarantees, may be required.

Loan shall be made only to private for-profit entities.

Loan may be renegotiated. Renegotiation proceedings, however, are not the borrower’s inherent right.

In general, repayment of loans will be made via equal payments over the term of the loan. Payments will be due and payable monthly, semi-annually, or annually. Alternative schedules may be arranged if deemed appropriate.

Loans may be made at below market interest rates. Interest rates may differ between projects. Rates charged and the down payment required will depend upon the needs of each project and the degree to which the proposal is in conformance with the objectives and priorities of the County’s Revolving Loan Fund Program.

The borrower may be required to provide a minimum of ten percent (10%) equity into the project. All loans shall be secured by collateral in an amount at least equal to the face value of the loan. A first position lien on fixed assets is the preferred security, but a subordinate position to another lender is permitted. Assets other than cash that are used as collateral must be documented by an appraisal and security agreement.

Payments are due on the first day of the month unless alternative dates have been agreed to by both parties.

After delinquency of five (5) days, the borrower may be charged a late penalty.

After ten (10) days, the borrower may be notified by certified mail. A meeting may be set up between the Board and the borrower to determine the degree of the problem and necessary steps needed for payment compliance.

Non-payment after sixty (60) days following the Board/borrower meeting may cause the City initiation of foreclosure procedures unless a satisfactory repayment schedule is negotiated. All of these details shall be outlined in a “Loan Agreement” between the borrower and the Review Committee.

In the event that the borrower does not achieve the job creation levels specified, or in the event that the total project cost is less than the amount specified in the application, then monies received from the Loan Fund may be subject to disallowance and immediate repayment. The maximum percentage of loan funds which may be disallowed due to failure to achieve performance targets within two years will be equal to the percentage of the performance targets not achieved.

The date of the first loan payment will be arranged on a project-to-project basis. Usually, the date of first payment will not exceed six (6) months from the date of the loan.

Submission of quarterly financial statements and job creation reports may be required of all borrowers. A Final Quarterly Performance Report and a final Status of Funds Report may be required from all borrowers within thirty (30) days after the two-year period to achieve performance targets expires. Copies of such reports will be forwarded to the Parkersburg Economic Development Director for review of the Review Committee.

11. LOAN REVIEW COMMITTEE

The Review Committee will be comprised of a least three members, as selected by the Board. These members may represent, but are not necessarily limited to, the following interests: banking, county government, accounting or bookkeeping, business administration, local or county development corporation members, or members of the Economic Development Board. The Administrator shall be an ex-officio member of the committee without a vote and have authority to call meetings.

Members of the Review Committee shall elect one of its members as Chairperson. Vacancies on the Review Committee shall be filled in the same manner as the original appointment.

A simple majority of committee members must be present in order to vote on a recommendation.

The Review Committee will be responsible for making investment recommendations concerning the investment of the balance of any remaining loan funds.

12. FUND ADMINISTRATOR

The Administrator of the Revolving Loan Fund Program will:

  1. Develop and compile the elements of each loan project and report to the Review Committee and the Board, as required.
  2. Serve the Review Committee by arranging meetings and presenting information.
  3. Market the Revolving Loan Fund Program throughout the City. Assist in the development, review and approval of all loan applications.
  4. Secure legal services for review and closing of each loan.
  5. Service each loan on behalf of the Board and monitor each borrower’s financial condition.
  6. Provide continuity and timeliness of Program activities.

13. USE WITH OTHER PUBLIC PROGRAMS

Program funds can be combined with any state or federal business assistance program. Applicants may be required to submit additional information as well as meet other program requirements in order to qualify for these programs.

14. PARTICIPATING LENDERS

Because the program relies on primary funds coming from private lenders and the fact that the County provides only supplementary financing, the applicant must provide evidence of private permanent funding.

15. BUSINESS PLAN

Applicants for the program will supply a sound business plan containing the proposed marketing strategy, long-term projections, balance sheet, cash-flow analysis, historic profit/loss and proof of acceptable accounting practices.

16. CONFLICT OF INTEREST

Elected or appointed Board officials and their immediate families are not eligible for Loan Funds.

The Review Committee members and their families, or former members within one year of service, are not eligible for Loan Funds.

The Review Committee will decide conflict of interest situations with possible appeal to the City Council.

17. CIVIL RIGHTS

No loan applicant may be denied a loan on the basis of race, color, national origin, religion, age, handicap, or sex. Each borrower will give assurances that he/she is in compliance with civil rights laws with respect to employment.

18. ENVIRONMENT

If a loan results in construction that adversely impacts wetlands, significant historic or archeological properties, or air and water quality, a statement of environmental impact must be submitted with the loan application, along with any required state or federal permit.

19. RETENTION OF RECORDS

All records related to each loan transaction shall be retained by the Administrator for a period of at least three (3) years after the date upon which the final loan payment is received.

20. DISCLAIMER

The Review Committee and the Board assume no responsibility for illegal use of funds, or from hazards or problems arising from the use of the funds for any applicant.

21. ADMINISTRATION OF THE FUND

The Parkersburg Economic Development Director will be responsible for maintaining the appropriate accounting system related to the operation of the Revolving Loan Fund. The Board will direct the Director in the investment of the balance of any remaining loan funds. Administration of specific loan agreements and monitoring of funded projects may be the responsibility of the Director or may be subcontracted to a qualified individual or firm. Cost for the administration of the Loan Fund may be derived from interest payments on loans made from the fund.