Areas Served: Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long or McIntosh counties, Georgia
PURPOSE The purpose of the loan program is to provide credit enhancement to lending institutions (banks) to encourage lending to eligible businesses or potential businesses located in Coastal Georgia that would not be funded otherwise.
ELIGIBILITY REQUIREMENTS 1. TYPE OF BUSINESS: Eligible businesses include most for-profit businesses (proprietorships, partnerships, or corporations).
Refer to ineligible businesses section, page 2. 2. CREDIT ENHANCEMENT: The participating bank must need and request in writing CADDA’s financial assistance.
3. USE OF PROCEEDS : – Land and building acquisition – Leasehold improvements/building renovations – Machinery and equipment – Inventory – Working Capital 4. REPAYMENT TERMS: Maximum five (5) to Twenty (20) years, depending on project – up to 5 years – Inventory & Working Capital – up to 10 years – Leasehold Improvements, Machinery & Equipment – up to 20 years – Land and Building Acquisition, Building Renovations Normally, the participating agreement will request the lender to consider purchasing CADDA’s interest if the business becomes bankable through the use of a balloon-payment before maturity.
5. CREDIT HISTORY The borrower must have a satisfactory credit record, having established credit with a reputable firm and complying with the payments in a prompt manner, for at least 12 months.
Any applicant that has not satisfied past due obligations will not be eligible for funding.
6. LOCATION Business must be located in Coastal Georgia region of Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long or McIntosh counties.
7. EQUITY INJECTION Normally, the borrower will be required to provide a minimum cash injection of ten percent (10%) for loans acquiring real estate and improvements, and twenty percent (20%) on loans buying equipment.
The cash injection may be substituted with equity in other assets, pledged to secure the debt, on a case-by-case basis.
100% financing is prohibited, without adequate collateral as business equity.
8. MANAGEMENT The borrowers must demonstrate satisfactory management experience or the potential to manage the type of business they are expanding or starting.
Management counseling in the areas of payroll tax form preparation, financial statement preparation, marketing, etc.
may be required, at the discretion of CADDA and the lender.
In addition, CADDA and/or the bank will require a qualified accountant to prepare the financial report.
9. COLLATERAL The bank will be secured by a lien on the project assets.
Personal guarantees from the owners will be required on all loans and additional personal collateral may be required to secure the guarantee.
At the discretion of the bank, an appraisal may be waived for real property securing a small debt, by using the most recent county tax assessor’s value for ad valorem tax purposes.
Unsecured loans are ineligible.
INELIGIBLE BUSINESSES AND USES 1. INELIGIBLE USE OF PROCEEDS – Relocating existing industry or business from one job market to another – Refinancing – Purchasing property for lease.
– Speculating – Acquiring Ownership 2. INELIGIBLE BUSINESSES – Non-profit businesses – Passive income or developer/landlord institutions – Lending and investment institutions – Media (newspapers, magazines, etc.
) – Hospitals – Farming and agricultural production LOAN PROGRAM FEATURES 1. LOAN AMOUNT Normally, the total loan amount should not exceed $150,000, assuming a funding percentage of 50% for each participant.
However, the total loan may exceed $150,000 provided CADDA’s participation is $75,000 or less and the lien is a shared pro-rata.
2. INTEREST RATE – Bank’s interest rate, is determined by the bank and limited to no more than NY Prime plus 4% (may be fixed or floating).
– CADDA interest rate will be reasonable.
3. OPERATION The borrower must be the user of the assets acquired with the loan proceeds, and be an operating-for-profit business.
The borrowers are not generally eligible if they plan to lease the project assets to a third party for its operation.
4. INSURANCE REQUIREMENTS The assignment of life insurance will be required equal to the loan amount.
This requirement can be waived, at the discretion of the bank and CADDA.
Hazard insurance for the value of the fixed assets securing the debt will be required.
5. ENVIRONMENTAL AUDIT AND RISK ASSESSMENT The bank may require an environmental audit.
This depends on the real property involved securing the loan.
6. OTHER CONDITIONS The borrower may be required to execute a loan agreement that will require the borrower to accept, on a periodic basis, practical assistance with management, preparation of financial statements, and other matters involved in operating the business, from a person or organization designated by the bank.
Contact InformationCoastal Area District Development Authority
Address: 501 Gloucester St., Ste. 201
City: Brunswick
State: Georgia
Website:
http://www.cadda.com/facts/rlf/ExpresPgmFactSht.htm
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