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HomeMy WebLinkAboutExhibitCITY OF MIAMI Economic Development Loan Fund Program GUIDELINES, FORMS, SCOPE OF WORK, ATTACHMENTS City of tatsoeni • Deportment of Community Development Last Revision: June 2009 Economic Development Loan Fund ("EDLF") Program Lending Policies and Guidelines The City of Miami has established an Economic Development Loan Fund ("EDLF") Program in accordance with the goals and objectives outlined herein. The EDLF Program. which will be administered by the City of Miami ("City") Department of Community Development ("CD"). will be capitalized using Community Development Block Grant ('`CDBG") funds authorized under 24 CFR 570. Purpose The goal of the Economic Development Loan Fund .Program is to provide businesses with financial assistance to support the retention and creation of jobs for low to moderate income City residents. The EDLF Program is designed to fill the financing gap between private debt financing and private equity. Funds are provided to create economic benefit through increased revenues and the creation and the retention of jobs in the City. Eligible Area • Capacity to` everaae funds` from other sources • Potential to • Ability to repay to 9 Readiness to proceed or planning to locate within the boundaries the Neighborhood Development Zones as d Plan and/or Special Target Areas. economic development Eligible Use of Funds and Activities Loan funds can be used for: • Purchase and Installation of machinery, equipment, furniture, fixtures • Leasehold improvements or expansions • Technology infrastructure • Renovation, improvement and expansion • Inventory Note: The use of funds for construction activities such as renovation, improvement and expansion will trigger a requirement that prevailing wages be paid for all labor (Davis Bacon gage Rates). Ineligible Use of Funds Funds cannot be used for the purpose of: • Paying off a creditor or creditors of the applicant who are inadequately secured and are in a position to susia gloss. • Providing funds for distribufion or payment to the owner, partners, or shareholder of the applicant. • Projects which are not Eligibility Criteria cress investment company. with the City's economic development program. A business may qualify for consideration provided it meets the following criteria: • Business is located or locating within the boundaries of the City of Miami. 2 • Business and/or Principals demonstrate that fmancing is not otherwise available on terms or conditions that would permit completion and/or successful operation or accomplishment of the project activities to be financed. • Business is an equal opportunity employer. • Business is not relocating jobs, except where the loan applicant is forced to relocate due to circumstances beyond their control (i.e. government intervention, building demolition, etc.). • Project involves no negative environmental impacts. • Project impacts an adequate number of jobs, as defined by 24 CFR 209 (b)(1)(i), to be created and/or retained for low to moderate income people. • All applicants shall grant City of Miami residents hiring preference over all applicants for any jobs created as a result of the loan. • The business ability to repa3 • Aff loans will f6 $2(,00.00, or p zlations, guidelines and policies as they to create or retain one, full time, permanent job for every • At least fty one percent 51%) of X11 jobs created or retained must be made available to low and moderate incomeersons as defined by HUD under Section 8. Job Creati • Jobs must be ieated within six (6) months of the loan closing if loan is not used for rehabilitation or leasehold improvements or the total project does not include rehabilitation or leasehold improvements. • Jobs must be created within eighteen (18) months of the loan closing if loan is used for rehabilitation or leasehold improvements or six (6) month after the completion of the rehabilitation/improvements, whichever is less. 3 Job Retention • The applicant must give details on why the borrowed funds are required to retain the jobs and demonstrate that without the assistance, the jobs Nvould be lost. Loan Amount Minimum: $20.000.00 Maximum: $80;000.00 • A HUD environmental review must be conducted and completed prior to disbursing funds. Note: Higher loan amounts may be approved in a case by casebasis by the City of Miami Commission. Loan Terms Repayment term shall be as follows: a) Equipment: Up to th,&,economic life of the assets involved, not to exceed the IRS depreciation limits (See IRS. Instructions for Form 4562) and not longer than seven (3) to, seven (7) years Lsidered on a case by case basis shall be 0% - 3% per annum; based on the All loansmusxe matched by the applicant's funds. Matching participation requirements will be: Capital: Appheat must dna h a minimum of 20% of capital needed for project. Equity: Applicant must have at least 20% equity in business. Special Target Areas Special Target Areas as defined in the City of Miami Consolidated Plan or approved by the City of Miami Commission for this loan program may have different from thee ones detailed above. 4 Application Fee There will be a non-refundable application fee of 5100.00. This application fee must accompany the loan application package. The application fee v -ill be cashed when the package is accepted for underwriting. Program Requirements: • Applicants and their spouses shall sign Unlimited Guaranties, even if the spouse is not part of the Company requesting the funds. • Commercial Insurance Policies naming the City of Miami as loss payee in an amount acceptable to the City of Miami Risk Department. All policies shall provide the City with mandatory 30 days written notices in cases of cancellation or material change. • Unless otherwise approved by the Housing and Loan Committee and/or the City of Miami Commission, all loans will require,: collateral position of any and all real property or equipment pledge as security for the loan. • Loans for equipment will require UCC -1 filings. • Once the loan is closed, recipient may not pledge, transfer, hypothecate, encumbrance or dispose of any asset purchased, in whole or in part, with funds from the City of Miami, without the written "approval, from the City of Miami. - • The City of Miami ray impose late fees if the business does not pay on a timely manner. • If'al.busifiessdoes not meet its 1nH=Um employment requirements, then the City shall ;call"the loan payable withih. 0 days. Non-reco Loans will generallynot be recommended for approval for the following reasons: • If the requested funds are,otherwise available on reasonable terms: a) From the dlspo�al at a fair price of assets not required by the applicant in the conduct of its business or not reasonably necessary to its potential growth, b) Through the use of personal credit and/or resources of the owner, partners, management, or principal stockholders of the applicant, c) From other Government agencies which provide credit specifically for the applicants' type of business, or d) From other known sources of credit; • For unsatisfactory credit history during the last twelve (12) months. 5 • If a bankruptcy was discharged during the last twenty four (24) months. • If the loan will provide funds for speculation in any kind of property, real or personal, tangible or intangible: • If the applicant is a charitable institution or non-profit enterprise, except for cooperatives which carry on a business activity for the purpose of obtaining pecuniary benefit for their members in the operations of their otherwise eligible small business concern; • If the applicant is a newspaper, book publishing company, magazine, or similar enterprise; • If any of the gross income of the applicant, (or any of its :principal owners) is derived from gambling activities, except for those small firms which obtain less than one third of their gross income from income or commission from the sale .of official state lottery tickets under a state license; • If the purpose of the loan is to provide funds to an enterprise primarily engaged in the business of lending or investments or to any otherwise eligible enterprise for the purpose of financing investments not related or essential to the,enterprise. Appeal Process Applicants will have IO'business days from the receipt of the letter not recommending the loan to appeal the decision. The applicant can provide additional documents at that time for consideration of the underwriting committee. If the loan is not recommended a second time, there will be no farther appeal entertained from the applicant. C. Loan Approval All loans made strictly under the policies of the EDLF program will be recommended for approval by the Housing and Commercial Loan Committee. If the Housing and Loan Committee denies a loan application, the applicant will be advised in uritina with an explanation as to why the loan was denied. All loans not meeting the EDLF program guidelines will require an additional approval by the City Commission. 7