REVOLVING LOAN FUND GUIDELINES
AND APPLICATION
Spring Valley EDA
The “Application for EDA Assistance” and an interview with the party seeking assistance will be used as the RLF application when assistance is requested.
The money in the RLF will be used only for loans and will be used as “gap financing” where other lenders are involved. The RLF is designed to assist individuals or businesses become established, to help with expansion of existing business, and to assist businesses with a relocation to Spring Valley. Any money obtained through private, state, or federal grants for a project and placed into the RLF will be subject to the respective funding agency’s guidelines and not to those contained herein. However, money paid back to the RLF form these projects will follow these guidelines.
RLF capital can be used for individual, commercial, industrial, or retail business ventures. The funds can be used to help an existing business expand, to help a local business purchase additional equipment, and can be used to help a new business become established within the community.
Any RLF money provided will be done at a loan collateral ratio of 1:1. The EDA will assume a first position on items used for collateral purposes. In situations where there are many funding sources, the EDA will assume a 2nd position on the appropriate collateral. The typical rate will be fixed at one half percent higher than the prime interest rate at the time of the application. The rate may be negotiable if it is determined that a lower rate is required to make the proposed project work.
Loans being made will follow accepted banking procedures. The terms, however, can be altered in order to structure a deal that will best match the applicant’s needs and make the project financially feasible.
The RLF will not be used to help an existing or new business compete with another like business already located in Spring Valley. The exception to this rule would be when a market survey, compiled by a reputable source, shows that the market for the new business or for the business planning expansion was adequate to allow the business venture to take place.
Money loaned for “working capital” cannot be used for salary purposes.
The business or individual(s) requesting assistance from the EDA must have at least 15% of their own equity invested into the project. Exceptions may be made if it is determined by the EDD and the EDA Board that the project would work well with less equity investment.
As a general rule, one full-time job or equivalent must be created or retained for every $15,000 requested. This requirement is based on 24 months from the time the assistance was approved (closing date). Businesses receiving assistance will agree in writing to employ a specific number of low to moderate income employees based on the total new and/or retained employees within the 24 month time frame. Additional requirements must be met for amounts over $25,000 (see adopted business subsidy criteria).
When the RLF contains a balance of $20,000 or less, the amounts loaned for any single business venture will be 20% of the current loan balance or 10% of all financing involved. When the RLF balance exceeds $20,000, the amount available for each loan will be 30% of the fund balance. This rule can be deviated from if the circumstances of the business venture so warrant and the EDA approves.
Depending on the circumstances of the business venture and the financial status of the City, the EDA can request the City Council to transfer money into the RLF to be used for project financing.
The suggested terms for different types of loans are as follows:
Machinery & Equipment – 5 to 10 years
Permanent Working Capital – 1 to 5 years
Land & Buildings – 15 to 20 years
All loan requests will be kept confidential until such time that they need to be brought to the EDA board for approval. The EDA holds open, public meetings and as such all information brought before the board becomes public. If confidentiality is an issue, it will be necessary for the applicant to inform the EDD so that he/she can take appropriate measures.
The Spring Valley EDA reserves the right to deviate from these RLF guidelines when circumstances dictate and the EDA Board believes it is in the best interest to do so.
When requesting amounts of over $25,000, or loans or loan guarantees exceeding $75,000, all such requests are subject to the attached criteria for granting business subsidies over $25,000.
Download the business subsidy application by clicking on the link below