Areas Served: Boone, Campbell, Carroll, Gallatin, Grant, Kenton, Owen, or Pendleton Counties
The Northern Kentucky Area Development District’s small business lending program, is a publicly administered development capital fund, established through a grant from the Economic Development Administration, U.S. Department of Commerce.
The term “Revolving” relates to the fact that RLF capital is replenished as loans are repaid and recycled into new loans.
These are one-time, direct loans – not revolving lines of credit.
The purpose of the program is to provide a source of direct financing for small business owners who are unable to obtain sufficient private financing for start-ups and expansions deemed to be of economic importance for the eight-county area served by NKADD.
The main objective of the RLF is to fill a capital gap by serving in the role of gap financier on projects that cannot obtain total private financing.
Inability to obtain private financing may be caused by either general shortages or restrictions on capital in the marketplace or the inherent risk level of the industry or business itself, and/or the nature of the proposed project.
Eligibility Requirements To be eligible to apply for an RLF loan, the applicant must meet the following basic eligibility requirements.
For a complete list of requirements, click here.
– The start-up or existing business must legally exist in one of the eight counties that comprise the NKADD service region: Boone, Campbell, Carroll, Gallatin, Grant, Kenton, Owen, or Pendleton.
– Applicant must be able to prove need for loan assistance, by providing either a bank rejection letter or a partial commitment letter.
– The proposed project must reflect an anticipated job creation or retention level of one (1) job for every $12,500 borrowed from the RLF.
– Applicant must possess sufficient collateral, equal to or greater in value to the amount of the loan amount.
– Applicant must invest a minimum of 10% owner cash or equity into the project.
Financing Policies The RLF is not in competition with area financial institutions and may not displace traditional sources of financing.
Instead, the RLF is intended to work with traditional banks and other private sources of capital to obtain adequate private financing to complete a project.
As such, a prospective RLF applicant must provide supplemental evidence documenting the need for RLF financing.
This documentation would include one of the following: – A partial commitment letter from a participating bank stating the loan terms, the maximum amount to be extended by the bank, and the need for the RLF’s participation; or – Bank rejection letter(s) listing the proposed loan terms.
A borrower will be deemed ineligible if credit is otherwise available on terms and conditions which would permit completion, successful operation, and/or accomplishment of the project activities to be financed.
An exception to this requirement may exist where RLF financing may also be used as an incentive, through favorable loan terms, to attract a new business or a business expansion into an eligible area in which it would not otherwise locate.
To induce private participation, the RLF may subordinate their lien on available collateral to that of the private lender, and offer more favorable terms of their portion of the financing.
In addition to the eligibility requirements, below are some specific policies and requirements of the RLF program: – Loan Amounts: The NKADD will consider loan requests of between $25,000 to $100,000. Due to the revolving nature of the program, sufficient funds are not always available to lend.
Contact the loan fund staff to determine if sufficient funds are available prior to submitting an application.
RLF Participation Level: For each loan project, RLF funds shall comprise between 15-50% of the total cost of each project, with the balance financed by private sources.
– Origination Fee: The borrower, once approved, will be charged a two percent (2%) origination fee that will be deducted from the loan proceeds, to help defray the administration costs of the loan.
– Closing Costs: The borrower will also be responsible for all closing costs associated with the loan.
– Interest Rate: Most loans are assigned a fixed interested rate, which is set by the Revolving Loan Fund Committee.
Using standard rating criteria, the Committee evaluates loan applicants and their projects as to the probability of their repaying the loan on schedule.
The minimum interest rate that may be charged for an RLF loan will be four (4) percentage points below the prime rate.
In no event will the interest rate determined be less than four percent (4%).
– Repayment Terms: Generally, loans shall be repaid in equal monthly installments, including interest and principal.
The borrower may repay an RLF loan at any time without prepayment penalty.
– Collateral Requirement: RLF financing will be secured by liens or assignments of rights to assets of the borrower.
The RLF may hold mortgage or take subordinate positions as app
Contact InformationNorthern Kentucky Area Development District
Address: 22 Spiral Drive
City: Florence
State: Kentucky
Website:
http://www.nkadd.org/businesses-employers/small-business-lending
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