HomeMy WebLinkAboutResolution 1997 (14) A RESOLUTION TO APPROVE THE POLICIES AND PROCEDURES GUIDELINES
FOR ADMINISTRATION OF A REVOLVING LOAN FUND ESTABLISHED
WITH FUNDS FROM A DEPARTMENT OF COMMERCE GRANT
RESOLUTION NO. l 4 Cl r i)
C
St. Croix County, Wisconsin
WHEREAS, the Wisconsin Department of Commerce awards grants to local units of government,
including counties, under the Community Development Block Grant Economic Development
(CDBG -ED) Program; and
WHEREAS, said grants are paid back to the respective local unit of government according to the
terms and conditions of the loans; and
WHEREAS, if St. Croix County is awarded a grant, it will establish an economic development
revolving loan fund under the guidelines of the Wisconsin Department of Commerce; and
WHEREAS, St. Croix County has prepared policies and procedures guidelines, a copy of which
is attached to this resolution, to oversee administration of all program income which may accrue
to a special revolving loan fund account to be held by St. Croix County.
THEREFORE, BE IT RESOLVED, by the St. Croix County Board of Supervisors that:
1. The policies and procedures guidelines relating to the administration of
a Revolving Loan fund established with a grant from the Wisconsin
Department of Commerce are hereby approved;
2. The Loan Advisory Committee shall have responsibilities as specified in the
revolving loan fund guidelines to carry out the administration of the program.
Dated this 1 day of — , 1997
Offered by: Administration Co tee
NEGATIVE AFFIRMATIVE
D 1 Stan afer
4 �
T' i a s tilipi
STATE OF WISCONSIN i � W C ! �" z
COUNTY OF 8T. CROIX Lee Kellah
I. Si E. Nelson, St. CroXr 1
c ore Ciedc, M b1EREBY CERTWY t at v� r1
Ste toreS^rinp a a tole and corrrid of Lin I , ucke
adcpl by the County Board of Cupervisors ' omas O' : nnell
at that. meed% head u -- i 1 7_ / S' 7 7
Sue E. Nebon, St Croix County Cleric
POLICIES AND PROCEDURES GUIDELINES
Revolving Loan Fund
St. Croix County, Wisconsin
Loan Advisory Committee: A seven (7) member loan review committee, comprised of five non-
elected residents from different parts of St. Croix County and two county supervisors shall have
the authority to review, select, and recommend loan applications to the full County Board of
Supervisors for final approval. A minimum of four of the five non - elected committee members
shall possess a lending, accounting, or financial background. All non - elected committee members
shall be appointed by the County Board Chair and shall serve staggered, three -year terms. The
two county supervisors shall be appointed by the County Board Chair and their appointment shall
be concurrent with their elected two -year terms. The county shall also designate a Revolving
Loan Fund (RLF) administer who shall explain the program to prospective applicants, provide
written information, assist applicants in completing requests, and process requests for financing.
Together, the RLF administrator and loan review committee shall periodically review all financial
statements and loan amortization schedules of RLF loan recipients, review and approve
documentation of business expenditures financed with RLF proceeds, record RLF security
instruments, maintain the RLF accounting records (which shall be segregated from other county
accounts), and report annually to the Department of Commerce regarding the use of the RLF
funds.
Loan meetings shall be held on an as- needed basis. Official actions must have the support of the
majority of the total loan review committee. Written records of all program activities including
program meetings, loan applications, and related documents, shall be maintained in appropriate
files. Reasonable administrative funds may be withdrawn from the RLF to cover personnel costs
and other administrative expenses. Administrative Expenses up to fifteen (15) percent of program
income may be used for direct loan administrative costs. In addition to paying costs for a RLF
administrator, these funds may be used for a) legal costs, b) consulting fees for credit analysis,
business plan reviews, and technical assistance, c) office supplies, typing, copying, mailing, and
related, d) training costs, and e) reasonable expenses, including mileage claims and per diem
claims of the Loan Advisory Committee, equal to I.R.S. mileage reimbursements and county
supervisor's per diem reimbursements. To generate additional revenue, the county may also
establish loan origination fees, closing fees, servicing fees, and other fees to cover charges directly
related to either processing an application or servicing a loan. All fees collected go to the RLF
account.
Loan Application: Requests for a RLF loan shall be made on an application provided by St.
Croix County. In addition to the application, the business shall submit company financial
statements, personal financial statements, pro formas (including a balance sheet and income
statement and cash flow statement which covers a three (3) year period based on the assumption
that the business will receive the requested loan), credit reports, business plan documents, and
other supporting loan information, including all applicable correspondence. These documents are
considered confidential and are to be used only in conjunction with the review of the RLF
application.
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1
Eligible Applicants/Businesses: Applications may be submitted by a sole proprietor or chief
executive officer of any business wishing to expand an existing operation or establish a new
operation in St. Croix County. No member of the governing body, loan review committee, or any
other official, employee, or agent of the county who exercises decision - making functions or
responsibilities in connection with the implementation of this program is eligible for financial
assistance under the St. Croix County RLF program. No loans will be made which are in
conflict with Wisconsin Statutes (i.e. private interest in a public contract prohibited). Applicants
shall not be disqualified based on age, race, religion, color, handicap, sex, physical condition,
development disability, sexual orientation or national origin.
Eligible Activities: Program loans shall be available to eligible applicants for the following
activities: 1) The acquisition of land, buildings, and fixed equipment; 2) Site preparation and the
reconstruction of buildings or the installation of fixed equipment; 3) Clearance, demolition, or the
removal of structures or the rehabilitation of buildings and other such improvements; 4) The
payment of assessments for sewer, water, street, and other public utilities if the provision of the
facilities will directly create or retain jobs; and 5) Working capital (inventory and direct labor
costs only).
Ineligible Activities: Program loans shall not be available for the following activities: 1)
Refinancing or consolidation of existing debt; 2) Reimbursement for expenditures prior to loan
approval; 3) Specialized equipment that is not essential to the business operation; 4) Residential
building construction or reconstruction; 5) Routine maintenance; 6) Professional services such as
feasibility and marketing studies, accounting, management services, and other similar services
(legal services incurred in the closing of a RLF loan are eligible); and 7) Other activities that the
loan review committee may identify during the administration of the program.
Ineligible Businesses: Program loans shall not be available for the following businesses:
1) Speculative investment companies; 2) Real estate investment companies; 3) Lending
institutions; 4) gambling operations; 5) Non -public recreation facilities; and 6) Other businesses
not serving the interests of St. Croix County.
Private Funds Leveraged: Loan amounts are subject to the availability of program funds.
The applicant must leverage a minimum of one dollar ($1.00) of private funds for every one dollar
($1.00) of loan funds requested. Higher leverage may be required at the discretion of the loan
review committee.
Loan Funds Per Job Created: At least one (1) full -time position or full -time equivalent
must be created for every $15,000 of program funds requested. The loan review committee may
require lower cost jobs where warranted (i.e. taking into consideration type of jobs, hourly wage,
job training required, and business start-up endeavors).
Financial Feasibility and Business Viability: The applicant must demonstrate that the
proposed project is feasible and the business will have the economic viability to repay the funds.
2
Low- and Moderate - Income (LMI) Benefits: The project shall provide permanent
employment or will retain existing jobs which would have been lost locally. Of the jobs created to
retain the project, at least fifty one percent of these jobs must be made available to low- to
moderate - income persons as defined by household incomes published by the US Housing and
Urban Development and available through the Wisconsin Department of Commerce.
Interest Rates: The interest rate shall be established by the loan review committee and may
be adjusted during the duration of the loan. As a guideline, the committee will establish the
interest rate equal to or above the prime rate as found in the Money Section in the Wall Street
Journal , the day the loan closes.
Loan Terms: a) Working capital loans shall have a maximum term of three years; b) Loans for
machinery, equipment, and fixtures shall have a maximum term of seven years; c) Real estate
loans shall have a maximum term of twelve years which can amortized on a twenty year basis with
the option of refinancing for an additional eight years; and d) In any case, the loan shall not have a
term longer that the terms of the private financing in the project.
Repayment: Terms may include loan amortization schedules with balloon payments.
Amortization schedules shall be established for monthly payments. Payment of principal and or
interest may be deferred for up to one (1) year if merited in the loan application. Interest shall
accrue during the deferment period and may be paid in full or added to the principal of the loan.
Following the deferral, interest and principal shall be paid for the remaining term of the loan.
Prepayment: There shall be no prepayment penalties.
Collateral: St. Croix County shall seek to have the best possible collateral position to ensure
that RLF loans are adequately secured.
Commitments from Private Lenders: Private lenders are required to submit a letter of
commitment in conjunction with a request for a RLF loan. Lender commitment letters should
include a) description of the type of loan being made by the lender (first mortgage, permanent
financing, construction financing, etc.), and b) the amount of the loan, interest rate, term, and
security availability, and repayment schedule and amounts. These commitments shall be obtained
currently with the negotiation of the terms and conditions of the RLF loan to ensure the interests
of St. Croix County are secured.
Adopted this / 1 day of u.Y , 1997
wp.b.misc.policyp £ wpd
3
ST. CROIX COUNTY
.� WISCONSIN
f"' COUNTY BOARD OFFICE
ST. CROIX COUNTY GOVERNMENT CENTER
y 1101 Carmichael Road
' Ie ' ,� Hudson, WI 54016 -7710
(715) 386 -4610
DATE: 4 June 1997
TO: Honorable Robert Boche, Chair
St. Croix County Board of Supervisors
FROM: Daryl Standafer, Chair !7. 5.
Administration Committee
RE: Proposed Policies and Procedures - Revolving Loan Fund
Please be advised that the Administration Committee completed its work on the proposed
policies and procedures relating to the administration of a revolving loan fund. We respectfully
request that the County Board consider adoption of the policies and procedures at the meeting on
17 June 1997.
We also request that you keep the following items in mind when you consider the policies:
- the County's adoption of the policies does not automatically establish a revolving loan fund.
Instead, it merely creates the foundation of a loan fund that a Department of Commerce grant
would establish for such a purpose. Without a D.O.C. grant, there is no County administration of
a revolving loan fund. In order for the County Board to be comfortable with understanding the
terms and conditions by which eligible business may qualify for a supplemental loan, it is
necessary to establish the policies and procedures.
- the administration of a loan fund does not replace conventional bank financing nor does it mean
that the County will be approving high risk loans. The supplemental loans will require that the
bulk of the financing request ( say 60 to 70 %) will be financed by a primary lender. In addition,
the small business owner is required to contribute a down payment. The revolving loan fund
represents the last piece of the financing puzzle and may include only 15 to 20% of the project.
All loan requests will be subjected to stringent credit tests to ensure that potential loans are of
reasonable risk. All loans will be backed by pledges of collateral plus personal guarantees and
promissory notes from the business owner.
- the Department of Commerce reports that 187 different units of government, i.e. towns,
villages, cities, and counties administer a revolving loan fund. This is a strong indication that
supplemental loan funds are readily used by all units of government in Wisconsin.
Please join the Administration Committee in the adoption of the loan fund policies.
POLICIES AND PROCEDURES GUIDELINES
Revolving Loan Fund
St. Croix County, Wisconsin
Loan Advisory Committee: A seven (7) member loan review committee, comprised of five non-
elected residents from different parts of St. Croix County and two county supervisors shall have
the authority to review, select, and recommend loan applications to the full County Board of
Supervisors for final approval. A minimum of four of the five non - elected committee members
shall possess a lending, accounting, or financial background. All non - elected committee members
shall be appointed by the County Board Chair and shall serve staggered, three - year terms. The
two county supervisors shall be appointed by the County Board Chair and their
appointment shall be concurrent with their elected two -year terms. The county shall also
designate a Revolving Loan Fund (RLF) administer who shall explain the program to prospective
applicants, provide written information, assist applicants in completing requests, and process
requests for financing. Together, the RLF administrator and loan review committee shall
periodically review all financial statements and loan amortization schedules of RLF loan
recipients, review and approve documentation of business expenditures financed with RLF
proceeds, record RLF security instruments, maintain the RLF accounting records (which shall be
segregated from other county accounts), and report annually to the Department of Commerce
regarding the use of the RLF funds.
Loan meetings shall be held on an as- needed basis. Official actions must have the support of the
majority of the total loan review committee. Written records of all program activities including
program meetings, loan applications, and related documents, shall be maintained in appropriate
files. Reasonable administrative funds may be withdrawn from the RLF to cover personnel costs
and other administrative expenses. Delete: Local funds may be used in situations when luau
. • , , • ' • ; • • • . Administrative Expenses up to
fifteen (15) percent of program income may be used for direct loan administrative costs. In
addition to paying costs for a RLF administrator, these funds may be used for a) legal costs, b)
consulting fees for credit analysis, business plan reviews, and technical assistance, c) office
supplies, typing, copying, mailing, and related, d) training costs, and e) reasonable expenses,
including mileage claims and per diem claims of the Loan Advisory Committee, equal to I.R.S.
mileage reimbursements and county supervisor's per diem reimbursements. To generate
additional revenue, the county may also establish loan origination fees, closing fees, servicing fees,
and other fees to cover charges directly related to either processing an application or servicing a
loan. All fees collected go to the RLF account.
Loan Application: Requests for a RLF loan shall be made on an application provided by St.
Croix County. In addition to the application, the business shall submit company financial
statements, personal financial statements, pro formas (including a balance sheet and income
statement and cash flow statement which covers a three (3) year period based on the assumption
that the business will receive the requested loan), credit reports, business plan documents, and
other supporting loan information, including all applicable correspondence. These documents are
considered confidential and are to be used only in conjunction with the review of the RLF
application.
1
Eligible Applicants/Businesses: Applications may be submitted by a sole proprietor or chief
executive officer of any business wishing to expand an existing operation or establish a new
operation in St. Croix County. No member of the governing body, loan review committee, or any
other official, employee, or agent of the county who exercises decision - making functions or
responsibilities in connection with the implementation of this program is eligible for financial
assistance under the St. Croix County RLF program. No loans will be made which are in
conflict with Wisconsin Statutes (i.e. private interest in a public contract prohibited). Applicants
shall not be disqualified based on age, race, religion, color, handicap, sex, physical condition,
development disability, sexual orientation or national origin.
Eligible Activities: Program loans shall be available to eligible applicants for the following
activities: 1) The acquisition of land, buildings, and fixed equipment; 2) Site preparation and the
reconstruction of buildings or the installation of fixed equipment; 3) Clearance, demolition, or the
removal of structures or the rehabilitation of buildings and other such improvements; 4) The
payment of assessments for sewer, water, street, and other public utilities if the provision of the
facilities will directly create or retain jobs; and 5) Working capital (inventory and direct labor
costs only).
Ineligible Activities: Program loans shall not be available for the following activities: 1)
Refinancing or consolidation of existing debt; 2) Reimbursement for expenditures prior to loan
approval; 3) Specialized equipment that is not essential to the business operation; 4) Residential
building construction or reconstruction; 5) Routine maintenance; 6) Professional services such as
feasibility and marketing studies, accounting, management services, and other similar services
(legal services incurred in the closing of a RLF loan are eligible); and 7) Other activities that the
loan review committee may identify during the administration of the program.
Ineligible Businesses: Program loans shall not be available for the following businesses:
1) Speculative investment companies; 2) Real estate investment companies; 3) Lending
institutions; 4) gambling operations; 5) Non -public recreation facilities; and 6) Other businesses
not serving the interests of St. Croix County.
Private Funds Leveraged: Loan amounts are subject to the availability of program funds. The
applicant must leverage a minimum of one dollar ($1.00) of private funds for every one dollar
($1.00) of loan funds requested. Higher leverage may be required at the discretion of the loan
review committee.
Loan Funds Per Job Created: At least one (1) full - time position or full - time equivalent
must be created for every $15,000 of program funds requested. The loan review committee may
require lower cost jobs where warranted (i.e. taking into consideration type of jobs, hourly wage,
job training required, and business start-up endeavors).
Financial Feasibility and Business Viability: The applicant must demonstrate that the
proposed project is feasible and the business will have the economic viability to repay the funds.
2
Low- and Moderate - Income (LMI) Benefits: The project shall provide permanent
employment or will retain existing jobs which would have been lost locally. Of the jobs created to
retain the project, at least fifty one percent of these jobs must be made available to low- to
moderate - income persons as defined by household incomes published by the US Housing and
Urban Development and available through the Wisconsin Department of Commerce.
Interest Rates: The interest rate shall be established by the loan review committee and may
be adjusted during the duration of the loan. As a guideline, the committee will establish the
interest rate equal to or above the prime rate as found in the Money Section in the Wall Street
Journal , the day the loan closes.
Loan Terms: a) Working capital loans shall have a maximum term of three years; b) Loans for
machinery, equipment, and fixtures shall have a maximum term of seven years; c) Real estate
loans shall have a maximum term of twelve years which can amortized on a twenty year basis with
the option of refinancing for an additional eight years; and d) In any case, the loan shall not have a
term longer that the terms of the private financing in the project.
Repayment: Terms may include loan amortization schedules with balloon payments.
Amortization schedules shall be established for monthly payments. Payment of principal and or
interest may be deferred for up to one (1) year if merited in the loan application. Interest shall
accrue during the deferment period and may be paid in full or added to the principal of the loan.
Following the deferral, interest and principal shall be paid for the remaining term of the loan.
Prepayment: There shall be no prepayment penalties.
Collateral: St. Croix County shall seek to have the best possible collateral position to ensure
that RLF loans are adequately secured.
Commitments from Private Lenders: Private lenders are required to submit a letter of
commitment in conjunction with a request for a RLF loan. Lender commitment letters should
include a) description of the type of loan being made by the lender (first mortgage, permanent
financing, construction financing, etc.), and b) the amount of the loan, interest rate, term, and
security availability, and repayment schedule and amounts. These commitments shall be obtained
currently with the negotiation of the terms and conditions of the RLF loan to ensure the interests
of St. Croix County are secured.
wp. b. misc.p olicypr. oce
3