Areas Served: Bath, Menifee, Montgomery, Morgan & Rowan Counties
The Gateway Area Development District’s (GADD) Revolving Loan Fund (RLF) is a publicly administered development capital fund, established through a grant from the Economic Development Administration, U.S. Department of Commerce.
It was established to provide debt financing for strategically targeted businesses unable to obtain adequate market financing for projects of economic benefit to an area.
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.
Purpose The Gateway Area Development District’s Revolving Loan Fund Program is designed to work in conjunction with private lending sources to provide financing for economic growth and job creation/retention.
The prospective borrowers for the RLF are new or expanding companies that need funding to fill the gap between their equity and the amount lenders are willing to extend for a project.
Eligible Uses Only businesses with projects located within the five-county service area of the Gateway Area Development District (Bath, Menifee, Montgomery, Morgan & Rowan) are eligible for loans from the GADD-RLF.
These loans must be for community development projects, the establishment of new businesses, expansion of existing businesses, creation of employment opportunities, or retention of existing jobs.
Such loans may include, but are not limited to: · Purchase of equipment, machinery, and/or fixtures including related costs · Business and industrial acquisitions when the loan will keep the business from closing, prevent the loss of employment opportunities, or provide expanded job opportunities.
· Business construction, conversion, enlargement, repair, modernization, or development with preference given to businesses utilizing developed industrial land or existing industrial buildings.
· Purchase and development of land, easements, rights-of-way, buildings, facilities, leases, or materials.
· Leasehold improvements · Working Capital Ineligible Activities Loans from the GADD-RLF will not be used for the following purposes: · To refinance existing debts · For any line of credit · For lending and investment institutions and insurance companies · For any speculative activities Loan Size Loans will not ordinarily be made in an amount less than $20,000 or greater than $150,000 to any one entity or company within one year.
Generally, the RLF investment will be the lesser of 30% of the total project cost or $150,000. Equity Requirements The RLF will require a minimum of 10% equity injection to be provided by the borrower.
The equity requirement for a working capital loans can be met if the borrower has existing net working capital of at least 10% of its working capital needs.
Maximum Loan Terms The terms of the loans are matched to the use of funds, with long-term financing structured to the productive life of fixed assets.
The terms of maturity of loans will vary depending on the needs of the applicant, but the following maximum repayment terms are generally considered appropriate: · Buildings and Real Estate – 15 years · Machinery and Equipment – 10 years · Working Capital – 5 years Interest Rates The interest rate on RLF loans will be indexed to the prime rate as published in the Wall Street Journal and will generally be at a fixed-rate within the range of five (5) to eight (8) percent.
Interest rates will not be less than four (4) percent.
Interest on loans will be compounded monthly.
Collateral Requirements When an applicant participates with a private lending institution the lending institution will generally hold the first lien with the GADD taking a second or junior position.
GADD employs standard collateral requirements; sufficient and appropriate collateral is required for all loans.
Corporate guarantees or personal guarantees will be required of any entity having ownership interest of 20% or more in the business.
Creation of Jobs GADD will require that for every $15,000 in RLF dollars loaned to a borrower, one full-time job will be created or retained.
The one job per $15,000 invested is required for the RLF portfolio as a whole, and not necessarily for each loan project.
Contact InformationGateway Area Development District
Address: 110 Lake Park Drive
City: Morehead
State: Kentucky
Website:
http://www.gwadd.org/rlf_program.htm
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