HomeMy WebLinkAboutRexburg Revolving Loan GuidelinesRexburg Revolving Loan Guidelines
Context
In an effort to bridge the gap between business and their financial needs in Rexburg and traditional
lending opportunities, the City of Rexburg created a Revolving Loan Fund (RLF). This fund was intended
to be used primarily for businesses that could not qualify or attain traditional funding in full or in part
from traditional lenders. This fund is managed by a City partner, The Development Company. To date,
some questions exist about the lending criteria. Does the business have to be in Rexburg City limits?
Can a business use the fund for working capital and/or inventory? How much money can be out on loan
at one time or how much should be held in reserves? This document will answer these questions and
give clearer guidelines so that the City, the Development Company and loan applicants will be able to
act on behalf of this resource in the best possible terms for continued growth and success.
Parties
City of Rexburg, the Development Company, other lending partners and applying business
Vision Goal
To ensure the most meaningful and resourceful use of the current monies held in the Rexburg Revolving
Loan Fund.
Process Overview
The money is the City of Rexburg’s. The City of Rexburg has contracted with the Development Company
to manage the fund in the most transparent process possible based on the criteria set forth by the City
and it’s Elected Officials. The process will have these major steps:
1. The City of Rexburg will contract with the Development Company to manage the Rexburg
RLF.
2. The Development Company will make available and accept applications for the RLF based on
the outlined criteria in this document.
3. The City of Rexburg will make available existing funds to the Development Company used
for loans.
4. The Development Company will make the City, specifically the Mayor, CFO and Economic
Development Director, aware of applications made to the Rexburg RLF ahead of processing
them through the Development Company’s loan committee. Notification will be submitted
by email with all proposed terms.
5. After loan is approved, the Development Company will notify the above mentioned people
at the City through email with the final terms of all contracts.
Specific Guidelines
These guidelines will direct the City and the Development Company as they interact with potential
applicants.
1. The business must be in the City of Rexburg city limits or approved by Rexburg City Council.
2. This loan will not be used for working capital or inventory loans.
3. The loan can be used for the following:
a. The purchase, refinance, construction, or remodeling of buildings for the business
given that:
i. Land can be considered as part of the loan for construction.
ii. The business has and pays for a certified appraisal.
1. An appraisal within 12 months may be accepted.
iii. The amount for buildings will not exceed 75% loan to value.
1. If partnered with another bank or lending source, the loan to value
may not exceed 90%.
iv. The rate will be a minimum of Prime +2.
v. The term will be a 20 year amortization, after 10 years, applicant must seek
traditional lending or reapply.
vi. The City must be in no lower than 3rd position on the asset.
vii. The business must have two separate and independent Personal
guarantors.
1. Personal equipment may be considered as collateral.
b. The purchase of equipment for the business given that:
i. The business provides a verifiable quote or invoice of the equipment’s
value.
ii. The amount for equipment will not exceed 60% loan to value.
iii. The business must collateralize the equipment with a UCC filing of claim.
iv. The City of Rexburg must have first position.
v. The rate shall be a minimum of Prime +3.
vi. The term shall be a 5 year maximum.
vii. The business must have two separate and independent Personal
guarantors.
1. Personal equipment may be considered as collateral.
c. The request for lower interest will be considered given that:
i. The applicant is providing a minimum of 30 net new jobs to the City.
ii. The pay rate of said jobs is a minimum of 200% of present or current
Madison Per Capita Income (PCI).
iii. PCI for Madison County, Idaho was $15,406 for 2014.
iv. Applicant must meet all other criteria listed above.
These loans are not normally available to city employees or their spouses to avoid inherent problems that
may arise from this relationship and to avoid potential bias that may exist or be perceived to exist. If the
Development Company Loan Committee feels like the loan would be a viable loan, a loan may be
considered for employees or their spouses as long as all loan criteria as noted above is met.
Last updated 9/13/18