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REVOLVING LOAN FUND PROGRAM
The Revolving Loan Fund (RLF) is intended to assist in the creation of new industrial businesses, meaning manufacturing, distribution, and office based businesses and the retention and expansion of existing industrial businesses in the immediate Kewanee area. The following states the purposes of the RLF program and sets forth administrative requirements concerning eligible uses, terms, and conditions of usage, and processing procedures.
(A) To stabilize and strengthen the city's economy by providing capital for industrial start-ups and expansions.
(B) To retain and attract industry that will provide permanent jobs or needed community service, especially those benefiting persons of low and moderate income.
(C) To support potential gains in real estate, income and sales taxes to the city.
(D) To stimulate private investment.
(E) To develop vacant or blighted land within the city and land, improved or otherwise, to be annexed by the city.
(F) To provide financial assistance to industry that can reasonably document its need for assistance or where the use of the funds will provide a needed services to the community.
(Ord. 2986, passed 7-24-95)
(A) Funds must be used to advance the previously outlined purposes of the program.
(B) Funds must be used for facilities located within the city or to be located (through new construction or annexation) within the city, or, if not contiguous to the city, not further than one mile from the city limits.
(C) Funds from the RLF can be used for the following: acquisition of land and buildings, construction, expansion, renovation, modernization, machinery, and equipment. Soft costs such as appraisal fees, accounting, and architectural services, must be paid by the applicant from sources other than the RLF. Soft costs may be considered as part of the total project costs.
(D) Funds must be used in a manner which emphasizes the use of lending institutions and private investment. At a minimum, 50% of each project financed in part by the RLF must come from other sources, including lending institutions and private investment which includes the investment by the applicant.
(Ord. 2986, passed 7-24-95)
(A) No RLF funds shall be used if sufficient funds are available from other sources to finance the project.
(B) No loan will be made where there is reasonable doubt as to the ability of the applicant to repay the loan.
(C) The applicant may be required to provide and assign to the RLF life insurance for the term of the loan.
(D) The applicant will be required to provide fire, hazard, and normal business insurance on all assets for the term of the loan. Said insurance shall be sufficient to secure the RLF loan and shall have a loss payable clause to the city and the Kewanee Community Development Corporation (KCDC), a not-for- profit corporation established to foster economic development within the City of Kewanee. KCDC is also known as Kewanee Economic Development Corporation (KEDC).
(E) The term of the loan shall not exceed five years when the loan is $50,000 or less. The term of the loan shall not exceed seven years when the loan is $50,001 or more. The rate may vary depending on need, term or duration of loan, security and risk of the loan. Covenants such as acceleration of payments, due on sale, balloon payments, variable rates, interest tied to net profit or gross revenues, or other similar loan recapture methods may be required. The minimum interest rate shall be 3%, and the maximum shall be at a rate to be determined by the committee hereinafter defined, which committee shall take into account such factors as risk, ability to pay, and all of the other considerations specified in this document or otherwise being the subject of consideration in the making this nature.
(F) The amount of any single loan from the RLF shall not be less than $1,000 nor more than 95% of the then existing loanable RLF funds on hand.
(G) The loan may be used in a subordinate position to another lender, at the discretion of the committee hereinafter defined, but otherwise a first position will be required.
(H) One job shall be created or retained for each $15,000 of RLF funds used.
(I) Fifty-one percent of the permanent jobs created must be available to low and moderate income persons. Every job shall be listed through job service.
(J) The applicant may not relocate the facilities or employment outside the city during the term of the RLF note unless the outstanding balance is paid in full. If the facilities are, or are to be, located within the one mile limit of the city referred to in § 121.02(B), the facilities or employment may not be located beyond that one mile limit during the term of the RLF note unless the outstanding balance is paid in full.
(K) The applicant, through its owners or officers, will normally be required to personally guarantee repayment of the RLF note, but the same may be waived at the discretion of the committee hereinafter defined.
(L) The applicant will be required to submit quarterly financial statements, including balance sheet and income statement, to the committee during the term of the RLF loan.
(M) The applicant will be required to provide a minimum equity position within the range of 10% - 20% depending on loan amount, loan security and loan risk.
(N) All notes shall be made payable to the city and the KCDC and shall be serviced by a committee as hereinafter defined. Any servicing fee shall be borne by the borrower.
(O) An affirmative action plan for ensuring equal employment opportunity for the jobs to be created shall be required of all borrowers.
(P) Any assignment of the loan by the borrower must be approved by the city and KCDC.
(Q) Funds shall be paid to and held in an account under the accountability of the city. Any payment of funds from said account shall require the signatures of two designated officials, one each from the city and the KCDC.
(Ord. 2986, passed 7-24-95; Am. Ord. 3397, passed 5-27-03)
(A) Applications shall be submitted to a designated committee comprised of the City Manager and City Attorney of the City of Kewanee and the Revolving Loan Fund Committee of KCDC. This committee shall be responsible for the administration of the loans and shall perform all functions and make all determinations specified in this document except where the same shall be specifically reserved to the city and the KCDC in total rather than the committee herein established. The applicants shall include all information required and may be requested to provide a cashier's check or bank money order for $50 to cover processing expenses. Upon receipt of an application, the committee shall review the submittal and confirm that all information is in order and is adequate to complete its review. Applicants will be advised if any necessary material is inadequate and will be given a deadline for submitting additional information.
(B) The committee shall make a recommendation as to the disposition of the application to the city and KCDC. Said recommendation shall be based on the extent to which the proposal meets the stated purposes of the RLF program and upon credit analysis, collateral analysis, cash flow analysis, and a review of any and all other information available. The recommendation shall include proposed terms and conditions for the advance of funds from the RLF.
(C) The city and KCDC shall determine which, if any, of such applications reviewed by the committee shall be funded.
(D) Information supplied by the applicant to the committee or the city and KCDC shall be kept strictly confidential, and shall not be disseminated without the proper written approval of the applicant. However, a summary of the proposed project including the loan amounts, the nature of the business, the jobs to be created and other benefits will be requested on a form which will be available for public dissemination.
(E) The committee shall notify each applicant in writing if such application will be funded, has been rejected, or is still under consideration. Said notification shall be mailed within a timely manner after the established deadline for application submittal.
(F) The city and KCDC shall take all reasonable steps to ensure that the RLF is properly serviced by the committee, and that the terms and conditions of the RLF are properly enforced, including legal action to collect debts owed, foreclose mortgages, and otherwise compel performances by the RLF recipient .
(G) The applicant of the RLF shall bear all expenses of the application submitted and review requirements and processes. The said cashier's check or bank money order for $50 processing fee will be used for any expenses incurred by the staff in application review including, but not limited to, credit reports, recordings, appraisals, photocopying, etc. Review or processing expenses incurred over this specified processing fee are payable by the applicant at the time of their occurrence.
(H) Notwithstanding anything herein to the contrary, the recommendation of the committee to fund a project shall be subject to the final approval of the KCDC and the city and no funds shall be dispersed until both of said organizations shall have approved the same on terms that are mutually agreeable. The city shall act by majority vote of the Kewanee City Council and the KCDC by majority vote of its Board of Directors.
(I) This RLF program shall be modified, changed or amended only upon the agreement of the city and the KCDC in writing and only after the approval of the Department of Commerce and Community Affairs of the State of Illinois to the extent such approval is required.
(J) KCDC and the city shall make no charge for the processing of loan payments and other ordinary administrative expenses incurred subsequent to the approval of the loan application and closing of the loan. In the event the KCDC and the city decide at a later date to charge for the processing of loan payments and other ordinary administrative expenses, the KCDC and the city agree that those charges will not exceed 10% of the total loan proceeds.
(Ord. 2986, passed 7-24-95)
RECAPTURE STRATEGY
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