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HomeMy WebLinkAboutExhibit 2CITY OF MIAMI Economic Development Loan Fund Program GUIDELINES, FORMS, SCOPE OF WORK, ATTACHMENTS City of Wv.D i • Department of Communi 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, «-hich will be administered by the City of Miami ("City") Department of Community Development ("Cl)"). 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 forlow to moderate income City residents. The EDLF Program is designed to fill the fmancing"gap bemeen 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 • canaci • Potential to Ability to repay 0 Readiness to proceed ed or planning to locate within the boundaries in the Neighborhood Development Zones as ate , Plan and/or Special Target Areas. other sources 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 activ,iti expansion will trigger a requirement that prevailing Wage Rates). Ineligible Use of Funds ;s such as renovation, improvement and wages be paid for all labor (Davis Bacon • Pa� of any tax lien or liab • Refimncd` pans made • Projects which', are not consistent with the City's economic development program. Eligibility Criteria 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 financing 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, asdefined by 24 CFR 209 (b)(1)(1), 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 repay theloan. Job Creat--Wiand. R • ., loans will ree 006-.D or p • At leaslifty one low and nW-Herat( t. Job Creation tion: applicant to create or retain one, full time, permanent job for every iereof, loaned. ent 51%) of.dll jobs created or retained must be made available to )nieersons as defined by HUD under Section 8. • Jobs must bete Bated 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 would be lost. Loan Amount -NZinimum: 520,000.00 Maximum: 580;000.00 • A HUD environmental review must be conducted disbursing funds. Note: Higher loan amounts may be approved in a case by Commission. Loan Terms Repayment term shall be as follows: a) b) C) Inter The int cash fl Matcr All log be: and completed prior to e City of Miami Equipment: Up to the economic life of the assets involved, not to exceed the IRS depreciation limits (See IRS Instructions for Form 4562) and not longer than seven (7) years. Others: Fully amortized between three (3'). to seven (7) years Special Circumstances: Longer repayments may be,considered on a case by case basis est Rates erest rates ©f the City of k ami's EDLF loans ovvte busni.ss. shall be 0% - 3% per annum, based on the Matching participation requirements will Capital: Appli' must match a minimum of 20% of capital needed for project. Equity: Applicant mss#`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 S100.00. This application fee must accompany the loan application package. The application fee will 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 Dousing and Loan Committee and/or the City of Miami Commission, all loans will requi`r'e a 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 Tasset purchased, in whole or in part, witli Minds from the City of Miami, without the wntten approval from the City ,of Miami. • The City of Mianu xnay unp&e late fees -if the business does not pay on a timely manner. • If 1,business does not meet its mnarriiam employment requirements, then the City shall calf"the loan paya3�le uithlnUa days. Non -recommended Loans - Loans will gener'all. not be recommended for approval for the following reasons: • If the requested funds are otherwise available on reasonable terms: a) From the disposal 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 Salo of official state lottery tickets under a state license; • If the purpose of the loan is to provide funds to an enterprise primarilyengaged in the business of lending or investments or to any others ise eligible enterprise for the purpose of financing investments not related or essential to the enterprise. Appeal Process Applicants will have la"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 further appeal entertained from the applicant. 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 Housin6 and Loan Committee denies a loan application. the applicant will be advised in writing 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