Areas Served: Statewide Michigan
The intent of the Michigan Business Growth Fund Collateral Support Program is to participate with lenders to finance diversification projects when faced with borrowers whose projected cash flows are considered speculative by the lender.
The mbgflpp will purchase a portion of a loan from the lender and offer a grace period on the program’s portion for up to 36 months.
Mbgflpp participation will be advantageous to lenders in two ways: 1) it will limit the project exposure of lenders; and 2) it will offer borrowers free cash flow during the grace period allowing full coverage on the lender’s portion of the loan.
This will enable suppliers to acquire the needed financing to diversify into new growth industries.
ELIGIBLE BORROWERS
¢ To be eligible for the program a company must fall under the definition of a firm which may be eligible to receive a mega tax credit (see program guidelines).
¢ To qualify, a business must be engaged with a private lender for the purpose of acquiring a commercial loan for a diversification or expansion project and must exhibit a cash flow shortage according to the lender’s analysis.
¢ Borrower must have no more than 750 employees, and otherwise comply with all state and federal requirements for the program PROGRAM GUIDELINES Among the guidelines:
¢ To be eligible for the program the borrower must participate in a qualified industry: mining, manufacturing, research and development, wholesale and trade, film and digital media productions, office operations, or a business that is a qualified high technology business as described in mcl207.803(n).
Generally this includes businesses dealing with most technological products and services.
¢ The entire proceeds of the credit facility must be used for projects within the state of michigan.
¢ The program can purchase up to 49.9 percent of a loan.
¢ The maximum participation is capped at $5,000,000, and may not be used to support loans of greater than $20,000,000.
¢ The program can provide reduced or zero interest terms on its purchase (maximum 36 months).
¢ The program can provide reduced or zero principal repayment on its purchase (maximum 36 months).
¢ After the designated grace period, the effective rate of interest on medc’s portion of the loan shall be no less than one percent and no more than three percent above the interest rate of the lead bank.
Contact InformationMichigan Economic Development Corporation
Address: 300 N. Washington Sq
City: Lansing
State: Michigan
Website:
http://www.michiganadvantage.org/Access-to-Capital/
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