Revolving Loan Fund
The City of Moline Revolving Loan Fund (RLF) Program is an opportunity for an entrepreneur/business person to obtain supplemental financing for a project.
The specific guidelines and policies of the program are outlined as follows:
Overall Intent - The overall intent of the RLF is to encourage the expansion and development of viable business/industrial activity in the City of Moline. The RLF will be targeted to those businesses and industries that cannot obtain economically feasible financing because of conventional interest rates and lending/exposure limits applied by local lending institutions. The RLF program is intended to provide the funds that make the project viable by filling the financing gap created by these conditions. Other financial commitments must be in place at the time of application. No loan shall be made from the program where there is reasonable doubt as to the ability of the borrower to repay the loan.
Job/Cost Ratio - A minimum of one job created per $10,000 loaned. Full Time Equivalent must be created within two years.
Leverage - The purpose of this program is to supplement financing for projects for entrepreneurs and business people that “but for” this assistance, the project could not proceed. The applicant will be required to provide a Justification of Public Financing document from their financial institution identifying the following:
• Total Cost of Project
• Amount Financed
• Remaining Amount of Funds Needed
• Reason Financial Institution is Unable to Fund Full Amount of Project
Loan Use - The loan program shall be available for use towards working capital financing to locate, expand, or retain their operation within the area. The loans can be used for but are not limited to construction of buildings, reuse and modernization of facilities, purchase of equipment and purchase of inventory. RLF loans shall not subsidize or refinance existing business loans.
Loan Term - The term of the loan shall not exceed 10 years.
Interest Rate – The interest rate will be 50% below Prime rate or at Prime rate as determined by bankrate.com and signed off by applicant when application submitted.
Personal Guaranty - Generally required by any principal owning 20% or more of the company.
Equity and Collateral Requirements - The borrower will be required to provide a minimum of 10 percent equity into the project. All loans shall be secured by collateral in an amount at least equal to the face value of the loans. Collateral requirements may vary as a function of amount, equity, and purpose. A first position lien on fixed assets and property is preferred security, but a secured subordinate position to another lender may be permitted. Assets other than cash that are used for collateral must be documented by appraisals or other appropriate valuation techniques. In projects involving direct working capital loans, the RLF will obtain collateral such as liens on inventories, receivables, fixed assets, and/or other available assets of the borrowers. Such liens shall be subordinate only to existing liens of record and other loans involved in the project. When appropriate, the borrower will be required to provide life insurance, fire hazard, or normal business insurance on all assets for the term and in the amount of the loan. Where required, the borrower shall also obtain flood insurance on property assigned as collateral.
Average Loan Size – The minimum loan amount shall be $10,000 with the maximum loan not exceeding $100,000. No loan shall exceed the outstanding balance of the RLF account or 1/3 of the total project cost.
Approval – Approval of a RLF loan is determined by the City’s Loan Committee with final approval from City Council.
Federal Regulations - All borrowers must comply with federal and state laws relating to civil rights, environmental protection, equal opportunity employment, flood protection, Davis-Bacon, access for the physically handicapped, affirmative action, historic sites, monthly employment reporting, and other regulations and assurances as required.
Ineligible RLF Activities:
- Speculative activities, such as land banking and the construction of speculative buildings since they do not normally result in the near-term job creation or retention.
- Loan activities and economic benefits resulting from activities that are not located in the City of Moline. RLF assistance must be withdrawn if for any reason the activity financed is moved from the eligible area.
- Loans which assist the relocation of jobs from another labor area.
- Loans for the purpose of investing in high interest accounts, certificates of deposit or other investments.
- Loan guarantee program.
- RLF loans used as substitute for private capital, where conventional loans can be obtained.