Sherburne County EDA Revolving Loan Fund
Eligible Uses of the Revolving Loan Fund
- Land and Building Acquisition
- Land Improvements
- New Building Construction
- Building Renovation and Modernization
- Machinery, Equipment & Fixtures - the remaining effective life must be equal to or exceed the life of the loan.
Ineligible Uses of the Revolving Loan Fund
- Debt Refinancing
- Working Capital
- Residential Real Estate
- Professional Fees
- Gambling, Religious, Political or Adult/Pornographic Businesses
Applications will be accepted for loan amounts ranging from $25,000 up to $100,000. Amounts available to applicants under this Program are determined based on an evaluation of positive economic impact and the number of full time (or full time equivalent) non-seasonal jobs that the organization will maintain or create within Sherburne County.
Application forms are available on line or can be received from Sherburne County Government Center; Administration Office. A completed loan application must be submitted to the County Administration Office.
Applicant should allow a minimum of four to six weeks for processing once the completed application and all required documentation are submitted. County Administration will assist the applicant through all stages of the application process. County Administration, in consultation with the a third party vendor, will review the loan request utilizing financial industry standards including, but not limited to, determining the following:
- Applicant is credit worthy
- Applicant can show lender commitments
- Applicant is willing to sign a personal guarantee
- Applicant can pledge adequate collateral
- Applicant can inject a minimum of 5% equity
- Applicant can demonstrate project feasibility (demonstrated cash flow projections, business plan, etc.)
- Applicant must owner occupy a minimum 51% of a building project
An initial meeting with the Applicant and the primary lender will be set up with County Administration and/or CMDC Business Financing. If the application meets the initial policy guidelines, County Administration will forward the completed application to the CMDC Business Financing for review. Following the review, CMDC Business Financing would make a recommendation to the County EDA for approval or denial. This recommendation would be presented to the County EDA for final determination.
For all projects, the applicant must have loan approval prior to beginning the project. Failure to do so will jeopardize loan fund eligibility.
Nothing in this Policy shall require the Economic Development Authority to make a loan to a business that meets the requirements of the Policy. The EDA is not required to make a loan or provide any financial assistance to a business that meets the requirements of this Policy unless the EDA in its sole discretion determines that it is in the County's interest to make a loan. Each application will be reviewed on a case-by-case basis.
Loan Terms Guidelines
- Minimum amount of loans - $25,000
- Maximum amount of loans - $100,000
- The loan term shall be no less than 3 year and may be negotiated up to 25 years based upon the productive life of the assets.
- Recipients will be charged a $1,500 upfront application cost.
- Recipients are responsible for all costs associated with the loan, including but not limited to legal and consulting costs that may be incurred by the County EDA in processing the loan application.
- RLF Loan generally shall not exceed 25% of total project costs
- The interest rate will be fixed for up to five years at Â½ point below the lowest prime rate published in the Wall Street Journal the day the loan closed. The interest rate will be computed as simple interest and will be fixed for a period not to exceed five years and adjusted for a similar period using the same index and margin. All loans will be structured to fully amortize over the term of the loan. Recipients will be required to set up automatic payments from their checking account for the monthly loan payments under this program.
- Recipients must at all times maintain property insurance on buildings and contents for full replacement value. Insurance policies shall name Sherburne County EDA as a Lender Loss Payee.
- Payments more than 30 days delinquent will be assessed a five (5) percent penalty. Payments first go towards any accrued penalties, then towards accrued interest, and lastly to reduce the balance of the principal.
- No project may commence until the Sherburne County EDA has approved the loan and required local government approvals have been obtained by the Recipient. Any costs incurred before the loan application has been approved are not eligible expenditures.
- The applicant will authorize the Sherburne County EDA to obtain verification of any applicable records, including assets, employment records, and consumer credit reports.
- The applicant is required to submit any/all applicable job reporting requirements and financial statements as required by the Economic Development Authority and as may be periodically requested by County Administration.
- Unless waived by the EDA, the applicant will be required to conduct a 1/2-hour visit with an industry expert as part of the County EDA's Business Lab program as a condition of receiving a loan.
Prior to releasing funds, the following documentation, and any other documentation required by the County EDA or County Administration, must be in place or provided at the appropriate time during the term of the loan process:
- Notice of Award - The Economic Development Authority must have reviewed and approved a complete application for an eligible Applicant.
- Loan Agreement - A loan agreement shall be executed by the Sherburne County EDA Chair and the principal owner(s) or officer(s) of the business. The agreement must be dated; must state the agreement between the Economic Development Authority and the business; and must specify the amount and terms of the loan funds delivered.
- Loan Security - Any loan made from the Revolving Loan Fund shall be adequately secured to the satisfaction of the Economic Development Authority. Mortgage or lien instruments must be executed at the time of the loan closing. The Sherburne County EDA will take a security interest position in any equipment, real estate or other collateral being financed. Subordinate lien positions loans will be accepted. The County Attorney shall record the instrument and place the original in the project file which is kept in County Administration.
- Amortization Schedule - An amortization schedule shall be prepared by CMDC Business Financing with a copy provided to the borrower. Copies also are retained on file with County Administration.
- Evidence of Permits - Documentation must be proved by the applicant.
- Maintain fire and extended coverage insurance on the project property as required during the term of the loan. Life insurance, Key Man and business interruption insurance may be required.
- Insurance will be required for full replacement value of the property being financed and should not be less than the aggregate balance of the loan(s) used to finance the project.
- Other Documentation - The Applicant may be asked to provide other types of documentation.
Post-Approval of Loan Recipient
In addition to the terms and conditions of the loan, all Recipients must agree to comply with the following:
- To use loan money only to pay the cost of services and materials necessary to complete the project or activity for which the loan funds were awarded.
- To permit inspections by persons authorized by the County EDA of all projects and properties assisted with loan funds. Related project materials shall also be open to inspections which include but may not be limited to, materials, equipment and condition of employment. Requests for inspection shall be complied with by the Recipient.
- To maintain records on the projects as may be requested by the County EDA. These files shall be maintained as long as the loan is active or for at least three (3) years after completion of the work for which the loan has been obtained, whichever is longer.
- The business must maintain an actual physical presence within Sherburne County.
Post Closing and Monitoring
- When the loan closing is completed and the funds are disbursed, County Administration will establish a loan servicing file to contain:
- All closing documents
- A log of all conversations and correspondence relating to the loan
- A master follow-up file to ensure loan monitoring functions are performed on a timely basis.
- The calculation of principal and interest, and monthly payment reports will be executed at the time of the loan closing by CMDC Business Financing.
- Fund Management services will be provided by CMDC Business Financing. CMDC Business Financing will assist with loan packaging, underwriting and related marketing services for the Fund.
County Administration will be responsible for collecting and maintaining evidence of ongoing compliance with any loan requirements, including job creation and retention, insurance, financial reporting and any special conditions of the original agreement. An annual report of projects financed through this program will be provided to the County EDA and County Board members each year.
The developer/business shall file a report for every year the business/developer receives a benefit under Revolving Loan Policy.
In the event the business is in default on any of the terms and conditions of the loan agreement, all sums due and owing, including penalties, shall, at the Economic Development Authority's option, become due and payable. To exercise this option, the County Attorney shall prepare a written notice to the business. The notice shall specify the following:
- The default
- The action required to cure the default
- A date, not less than (30) days from the date of the notice, by which the default must be secured to avoid foreclosure or other corrective action.
- Any penalties incurred as a result of the default, inability to create job, etc.
The County EDA will determine when and how to collect and liquidate secured collateral in its sole discretion.
Use of Loan Repayments and Reporting
Repaid loans shall be re-deposited in the Revolving Loan Fund Account and used in a manner consistent with these policies and procedures. A separate accounting record for each loan shall be kept to account for all funds loaned.
Download an Application Form (PDF) or request one by writing to the contact address to the upper left. A completed loan application must be submitted to the County Administration Office.