BACKGROUND

Revolving Loan Funds (RLF) have become an increasingly popular business financing tool because of their ability to leverage public and private dollars and recycle funds. RLFs provide businesses with secondary direct loans, loan guarantees and other financial assistance. As the RLF receives the principal and interest from outstanding loans, the money is made available to another borrower. This recycling of funds makes RLFs particularly valuable in light of the growing scarcity of development funds.

RLFs are designed to alleviate the high cost and short supply of capital for businesses by providing flexible loan terms. Typically, RLFs lower the rate, lengthen the term or reduce the risk of a loan. By increasing accessibility to capital, RLFs are an effective tool of leveraging. RLFs are typically combined with other public or private dollars.

ELIGIBLE USES OF THE REVOLVING LOAN FUND

1. Land & Building Acquisition
2. Land Improvements
3. New Building Construction
4. Building Renovation
5. Machinery, Equipment & Fixtures

INELIGIBLE USES OF THE REVOLVING LOAN FUND

1. Debt Refinancing
2. Working Capital
3. Equipment Relocation

TERMS AND CONDITIONS

1. Term is determined by the RLF Committee and fixed at 5 years or less.
2. Minimum loan fixed interest rate shall equal 6%.
3. Maximum loan amount shall not exceed $20,000.
4. Minimum loan amount is $5,000.
5. RLF Loan shall not exceed 50% of the total project costs.
6. Applicant will pay 1 point to cover legal, recording and other fees.
7. The applicant must establish and maintain the business within the City of Lake City boundary.
8. All construction and renovation must comply with the City codes and policies; repairs may include the following: 1) mechanical, heating, plumbing and electric 2) structural, including the facade and energy related improvements.
9. Security and personal guaranty requirements will be determined by the RLF Committee. These requirements shall be consistent with the financial industry standards.
10. Life insurance, key man policy and business interruption policies may be required.
11. Applicants must be willing to sign a personal guaranty if required.
12. No project may commence until the City of Lake City has approved the loan. Any costs incurred before the loan application has been approved are not eligible expenditures.
13. No building construction may commence until the required City permits are secured.

PROCEDURE

1. Applicant meets with the EDA Director and secures an application form.
2. Applicant submits the completed application along with required attachments to the EDA.
3. The EDA Director schedules a meeting of the RLF Committee to review the application.
4. RLF Committee reviews application and makes a recommendation to the City Council.
5. If a favorable recommendation is determined, the EDA Director will place this item on the agenda for the next regularly scheduled City of Lake City Council Meeting. The RLF Committee is expected to give their approval or state their reason for disapproval within 30 days. A simple majority is needed for approval.
6. EDA Director makes the presentation to the Council with the applicant in attendance.
7. If the Council approves the loan, the EDA Director will be instructed to prepare the necessary documentation and have the documentation reviewed by the City Attorney.
8. Upon completion of the documentation, the loan is closed upon and documents are recorded.
9. Applicant commences with monthly payments per the repayment schedule.

Applicant should allow for at least a 30 day timeframe once the completed application and all required documentation is submitted. The EDA Director will assist the applicant through all stages of the application process. The Committee will review the loan request utilizing financial industry standards including but not limited to:

1. Applicant is credit worthy
2. Applicant can show lender commitments
3. Applicant is willing to sign a personal guaranty
4. Applicant can pledge adequate collateral
5. Applicant can inject adequate equity

MAKEUP OF THE RLF COMMITTEE

1. Common Council Members (may include the Mayor): 2
2. Economic Development Authority Members: 2
3. City Finance Director: 1
4. EDA Director: 1
5. Community Member at Large: 1
Total RLF Committee Members: 7

LAKE CITY REVOLVING LOAN FUND PROGRAM
APPLICATION

Name of Business: __________________________________________________
Business Address: __________________________________________________
City: _______________________ State: ______ Zip: ___________

Phone: _________________ Email Address: _______________
Contact Person: ____________________ Phone: ___________ Fax: ______________

Type of Business: _____ Sole Proprietorship ______ Partnership _______ Corporation

Date Established: _______________________ SIC Code: _________________

Employers Federal Identification Number: _____________________________
Employers State Identification Number: _______________________________

Professional Services/References:

Name of Bank: ____________________________ Phone: ____________________
Bank Address: ______________________________________________________
City, State, Zip: ______________________________________________________
Contact Person: __________________ Account #: _____________________
Working Capital Line of Credit: _____________ Fax: ______________________

Name of Attorney: _________________________________________________
Attorney Address: __________________________________________________
City, State, Zip: ____________________________________________________
Phone: _________________ Fax: _______________________

Name of Accountant: _______________________________________________
Accountant Address: _________________________________________________
City, State, Zip: ____________________________________________________
Phone: ____________________ Fax: _____________________


Current and Projected Employment:

Sources and Uses of Funds:

Project Summary:

Possible Required Attachments:

A. Business Plan including description of project, business history, scope of business, product offered and financial projections.

B. Signed personal financial statements dated as of the date of application for any person who owns 20% or more interest in the business.

C. Federal tax returns filed by the business for the previous two years or audited financial statements.

D. Any other information, including any key person insurance, which may be available to secure the loan.

E. Information concerning any pending or threatened litigation or administrative proceeding, and outstanding administration orders, judgments or injunctions or involvement in any bankruptcy.

F. Certification of business compliance with all state laws affecting the conduct of business within the state including evidence of payment of last quarters payroll tax and workers compensation insurance coverage.

G. Letter from:
1. The County Clerk verifying there are no outstanding judgments against the business or business owners.
2. The County Recorder verifying there are no outstanding State or Federal Tax Liens against the business or business owners.
3. The County Treasurer and Auditor verifying there are no past due real estate taxes owed by the business or business owners.

H. Statement from the applicant that the project could not be done but for this financing.

I. Statement concerning the source of equity for the project, and how it will be obtained and appraised.

J. Statement concerning how the project will benefit the community and impact the local tax base.

K. Copy of the last commitment letter from the bank indicating the working capital line of credit.

L. Commitment letter from the bank regarding the financing the bank will provide for this project.

Signatures:

I declare that any statement in this application and in its required attachments, or information provided herein, is true and complete in substance and in fact. I am aware that the Lake City Revolving Loan Fund Committee is subject to the open meeting laws of the State of Minnesota and that the application information and required attachments will become public data once a funding decision has been reached. I am aware that until such time as a funding decision has been reached that the application materials will be considered nonpublic data other than company name, address and other identifying information.

Name of Business: __________________________________________________

By: _________________________________ Title: ______________________

Date: ____________

Attest: _______________________________ Title: ______________________

Date: ____________

INFORMATION RELEASE AUTHORIZATION



To Whom it May Concern:

You are hereby authorized to release to the Lake City Economic Development Authority, its successors and assigns any information you may possess regarding the following:

* Employment history, dates of employment, title, income, stability, etc.

* Banking and savings accounts, deposits and balance verifications.

* All Loan ratings, opening date, high credit, payment amount, loan balances, payment records and pay off information.

* Any other information requested in connection with a determination of credit worthiness.

This information is for the use of the Lake City Economic Development Authority and its investors, successors and assigns in connection with my/our application and the conduct of Post closing Quality Control Audits as required by various government and quasi-government agencies.

A photocopy of this authorization for the business and individuals, bearing the photocopied signatures of the undersigned, may be deemed to be the equivalent of the original and may be treated and used as a duplicate original.


Business Name: _________________________________________

Address: ______________________________________________

City, State, Zip: _________________________________________

Telephone Number: ______________________________________

Federal Tax Identification Number: ___________________________
State Tax Identification Number: _____________________________

Applicants Full Name: _____________________________________

Social Security Number and Date of Birth: ______________________

___________________________________
Applicants Signature


Co-Applicants Full Name: __________________________________

Social Security Number and Date of Birth: ______________________

___________________________________
Co-Applicants Signature