Richford VT

RICHFORD ECONOMIC ADVANCEMENT CORPORATION (REAC)

REVOLVING LOAN FUND PROGRAM

MISSION:

The REAC Revolving Loan Fund Program was developed to make reasonable, profitable loans, to support the start-up or expansion of small and emerging private business enterprise, with

consideration being given to existing or potential clients with economic activity in Richford VT.  Priority is based on job creation and/or retention.

LOAN COMMITTEE:

The Loan Committee reviews all loan applications, based on the REAC Loan Policy and are consistent with the Rules and Regulations of the USDA Rural Development’s Rural Business Enterprise Grant (RBEG) Program.  All recommendations of the Loan Committee are subject to the approval of the full Board.

ELIGIBLE LOAN PURPOSES:

1.    Business and industrial acquisitions.

2.    Business construction, conversion, enlargement, repair, modernization, or development.

3.    Purchase and development of land, easements, rights-of-way, buildings, materials.

4.    Purchase of equipment, leasehold improvements, machinery, or supplies.

5.    Pollution control or abatement.

6.    Transportation services.

7.    Start-up operating costs and working capital.

8.    Agricultural Processing.  Examples: Purchasing equipment to manufacture value-added agricultural products (cheese, syrup, meat curing, drying, etc) and working capital.

9.    Feasibility studies.

10.  Hotels, motels, tourist homes, convention centers, tourist and recreational facilities.

INELIGIBLE LOAN PURPOSES

1.    Loan funds in excess of need to accomplish the purpose of the borrower’s project.

2.    Payment to the owner, partners, shareholders, etc, when such persons will retain any portion of their equity in the business. Business must be bought out at 100%.

3.    Charitable institutions: churches, organizations affiliated with churches, fraternal organizations.

4.    Assistance to government employees, military personnel, principals or employees of the borrower or organizations for which such persons are directors/officers or in which they have ownership of 20 percent or more.

5.    A loan to a borrower which has an application pending with or a loan outstanding from

a.    another intermediary involving a Revolving Loan fund if the total loans would exceed the limits established in REAC’s loan limits.

6.    Agricultural Production.  Examples: Cultivation, production, growing, or managing of crops, plants, animals, or birds, for human consumption, or livestock feed.”  

7.    Transfer of ownership unless a loan will keep the business from closing, prevent the loss of employment opportunities in the area, or provide expanded job opportunities.

8.    Community antenna television services or facilities.

9.    Any illegal activity.

10.  Any project that is in violation of either a Federal, State, or local environmental protection law or regulation or an enforceable land use restriction unless the assistance given will result in curing or removing the violation.

11.  Lending and investment institutions and insurance companies.

12.  Golf courses, race tracks, or gambling facilities.

BORROWERS AND ELIGIBILITY

1.    Borrowers will be individual or formed business owners, needing to apply for gap or intermediate financing, with authority to incur the debt and carry out the purpose of the loan.

2.    Must be citizens of the Unites States. or reside in the United States after being legally admitted for permanent residence.  In the case of an organization, at least 51 percent of the outstanding membership or ownership must be either citizens of the Unites States or residents of the United States after being legally admitted for permanent residence.

3.    Business must locate in Richford.

4.    Must be unable to finance the proposed project from its own resources or through commercial credit or other Federal, State, or local programs at reasonable rates and terms, as determined by REAC. Letter of denial or inducement will be required.

5.    Must provide 26% of the total loan request and show documentation that such funds are available. (Example: Request $10,000 loan – Borrower provide $2,600 - REAC will loan $7,400)

6.    Must provide a written commitment to evidence the number of jobs that will be created or retained as a result of the requested loan.  Requirement is one (1) job per each $10,000 loaned. 

7.    Must, along with its principal officers (including their immediate family) hold no legal or financial interest or influence in the intermediary. REAC and its principal officers (including immediate family) must hold no legal or financial interest or influence in the borrower’s business.  However, this paragraph shall not prevent REAC from making a loan to one of its members. In such instances, the member of Loan Committee or Board would not be involved in any part of the loan review process and would not vote.

8.    The applicant and its principal officers can not be delinquent on ANY Federal, State County or Local tax debt.  Any such delinquency shall cause the proposed applicant to be ineligible.  Funds from REAC’s Revolving Loan Fund can not be used to cure the delinquency.

LOAN LIMITS:

1.    Minimum loan amount $5,000;  

2.    Any one loan will not exceed $25,000; or 75% of the total project cost.

3.    Any Revolving Loan Fund borrower (including subsidiaries and affiliates) shall not be approved for a culmination (total) of more than $25,000 from the Revolving Loan Fund.

LOAN TERMS:

Short-term Working Capital Loans

Minimum period of one-year and a maximum of four (4) years.

Commercial and Industrial Equipment

Maximum term seven (7) years. Subject to useful life of collateral. Includes business vehicle purchases.

Commercial and Industrial Real Estate - Purchase, construction or expansion of industrial or commercial real estate

Maximum term twenty (20) years. Subject to useful life of asset(s) being financed. Not to exceed exceed 75% of the lower of the appraised value

INTEREST RATES - FIXED: Determined at closing by Wall Street Prime Rate

EQUAL OPPORTUNITY LENDING:

In accordance with Federal law and US Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, sec, age, or disability. To file a complain of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W. Washington, D.C. 20250-9410, or call (800) 795-3272 (voice, or (202) 720-6382 (TDD)

Funding for this Revolving Loan Fund was received from USDA Rural Development.