MIDAS Revolving Loan Fund

Category: Revolving Loan Funds

Maquoketa Industrial Development Assistance Service (MIDAS) Revolving Loan Fund (RLF) Program Summary:

• MIDAS' goals are to create/retain jobs and/or expand the local economy.
• MIDAS' RLF is used for “gap financing.” The City is not a substitute for a traditional lender.
• MIDAS' RLF may not be used as the primary vehicle to refinance another type of debt.
• All loan applicants must demonstrate the ability to repay all of their loans, both MIDAS' and others.

Uses

• Purchase or improvement of land.
• Purchase, new construction, or improvement of buildings.
• Construction, conversion, enlargement, repairs or modernization of buildings.
• Purchase of equipment, machinery.
• Purchase or development of access streets and roads, parking areas, utilities, and pollution control/abatement.
• Startup operating cost and working capital.
• Technical assistance for private business enterprises.

Loan Terms

• Loans made from the RLF typically will not be less than $5,000 or more than $20,000.
• The interest rate will typically range from 3-5% and typically will not exceed prime rate by more than 2%. The Loan Committee will determine the rate.
• Loans can be amortized over the lesser of seven years or the life of the security. The Loan Committee shall determine the term.

Lending Criteria

• It is MIDAS' goal to act as a "gap financing" entity and play a role as the lending body of last resort. -The loan applicant must be able to demonstrate the ability to put at least 10% in cash into the project.
• There must be evidence presented by the applicant that indicates the RLF loan is necessary to make the proposed project feasible.
• Generally, loans are based upon criteria of $10,000 in loan funds per job (either created or retained) or some other significant community economic development impact.
• The RLF’s participation in a project shall never be more than 50%. The applicant’s matching funds must come from a commercial lender, another lender, or the applicant’s personal funds.
• RLF loan funds will not be used to pay off any previous debt. Refinancing construction financing is an exception to this rule, however, this must be approved by MIDAS beforehand.
• Security shall consist of the best lien available on real estate, equipment, inventory, etc. The discounted value of the security (using typical lender discount rates) shall equal or exceed the value of the loan. The Loan Committee may require personal guarantees and/or co-signors.
• Project / business to be assisted by the RLF program typically must be physically located within the City of Maquoketa. If the business relocates outside of the City of Maquoketa, the Loan Committee may require immediate pay-off of the loan. (On a case by case basis, the Loan Committee may waive this requirement and provide loan funds to a business located outside the City of Maquoketa if the committee determines doing so will have a positive economic impact on the community to be assisted with RLF funds.)
• Loans made from the RLF are subject to the USDA/Rural Development's approval.
• Except when limited by USDA/Rural Development regulations, the MIDAS Board may vote by a supermajority of a minimum of 4 of 5 votes to override the strict use of the lending rules and criteria described within.

Application Materials/Process

• This shall include aMIDAS Loan Application, plus information provided to applicant's primary lender, such as profit/loss statements, tax returns, personal and/or company financial statements, a repayment plan, description of collateral, proof of other financing, and resume, if applicable.
• The applicant must agree to allow MIDAS to discuss the loan application with the primary lender and any other lender.
• The Loan Committee may require written feasibility studies, business plans, market studies, etc. as appropriate for the business type.
• The proposed project must be presented to the Loan Committee by the prospective business owner or her/his representative.
• Costs associated with processing the application (e.g. credit report fees, UCC and lien search fees, filing security documents, filing legal documents fees, etc.) shall be the responsibility of the applicant.

USDA's Limitations on Loans from the RLF

• RLF funds will not be used to produce agriculture products through growing, cultivation, and harvesting either directly or through horizontally integrated livestock operations except for commercial nurseries, timber operations, or limited agricultural production related to technical assistance projects.
• RLF funds will not be used to finance comprehensive area-wide type planning. This does not preclude the use of grant funds for planning for a given project.
• RLF funds will not be used to fund a part of a project which is dependent on other funding unless there is a firm commitment of the other funding to ensure completion of the project.
• Loans will not be made unless there is a reasonable prospect that the applicant meets the definition of "small and emerging private business enterprises" defined as "any private business that will employ 50 or fewer new employees and has less than $1 million in projected gross revenues." If the grantor changes its definition of small and emerging business as defined by the Rural Business Enterprise Grant regulations, the grantee reserves the right to utilize the amended definition without further approval from the grantor.
• At least 51 percent of the outstanding interest in the applicant must be owned by those who are either citizens of the United States or reside in the United States after being legally admitted for permanent residence.

In accordance with Federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, age, disability, religion, sex, and familial status. (Not all prohibited bases apply to all programs). To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 TDD).

*Contact Jackson County Economic Alliance for more information regarding this incentive, (563) 652-4549.