Economic Development Revolving Loan
CITY OF SALINA
ECONOMIC DEVELOPMENT REVOLVING LOAN FUND PLAN
ESTABLISHMENT OF FUND
The Revolving Loan Fund (RLF) shall initially consist of the principal and
interest repaid to the City by the private firms who have received from
the City, CDBG Business Financing Loans. Subsequent payments to the Fund
shall consist of the principal and interest from future loans made directly
by the Ci ty, or through future Community Development Block Grant awards
from the State. In addition, interest received from the fund account itself
shall be credited to the Fund. The City Commission may contribute monies to
the Fund from other sources should they so desire.
ESTABLISHMENT OF LOAN ADVISORY COMMITTEE
The Sa 1 i na A rea Economi c Deve 1 opment Counc i 1 s ha 11 be the adv i sory body
charged with evaluating loan applications. The duties of the Salina Area
Economic Development Council shall be to screen the applications of those
applying for assistance from the Economic Development Revolving Loan Fund
based upon the technical review of the loan application by the Loan Review
Committee and the criteria and guidelines for the fund established by the
City Commission. The Council shall then submit a recommendation to the
City Commission as to whether the loan application should be approved. The
recommendation shall include the purpose for which the loan money is being
sought, the loan amount and any recommended terms and conditions.
LOAN REVIEW COMMITTEE
The Loan Review Committee shall consist of members representing the Chamber
of Commerce, the Salina Airport Authority, the Small Business Development
Center, city staff and private financial institutions. One member shall be
appoi nted to represent 1 oca 1 banks and one member shall represent 1 oca 1
savings and loans. These two appointments shall be made on a rotating basis
so that all financial institutions have an opportunity to be represented on
the committee. The duties of the Loan Review Committee shall be to review
the applicant1s financial statements in order to determine the applicant1s
credi tworthi ness, the soundness of the investment and conformance to loan
program requirements. The Loan Review Committee shall submit a list of
el igible appl icants to the Economic Development Council together with a
summary of information and data pertaining to each applicant.
ROLE OF THE CITY COMMISSION
The decisions regarding which applicants are funded, the specific terms of
the loan and other matters shall be made by a majority vote of the members
of the City commission; which decisions shall be based upon their general
judgement, recommendati ons of the Economi c Deve 1 opment Counci 1 and any
formally adopted criteria and guidelines. However, the City Commission may
waive or add to any criteria or gUidelines if it is determined to be in the
best interest of the City.
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LOAN APPLICATION PROCESS
The following process will be utilized:
1. Applicants must complete the Application Form, Personal Financial
Statement Form and Use of Loan Proceeds Form. These forms shall be
available from the Department of Planning and Community Development
with each document returned there upon completion.
2. Letters of Commitment from private sources or financial institutions
confirming the required private financing are to be included with the
application.
3. Applicants must submit proof that the planned project cannot be
totally financed from private sources and that the Revolving Loan Fund
is being used as a "Lender of Last Resort".
4. The Loan Review Committee reviews the completed forms and the appli-
cantls financial status and submits a list of eligible applicants
to the Economic Development Council. Ineligible applicants will be
informed of the deficiencies in their application.
5. The Economic Development Council reviews the applications of eligible
applicants. After review of the application, the Council makes its
recommendation to the City Commission. The Council may either:
a. Recommend approval or denial of the loan application as
submitted; or
b. Recommend approva 1 of the loan app 1 i cati on subject to certain
revisions or conditions; or
c. Ask the applicant to provide additional documentation or
information to the Council.
6. After receipt of the Economic Development Council's recommendation,
the City Commission may approve, conditionally approve or deny the loan
application.
ELIGIBILITY GUIDELINES
1. Eligible Businesses:
a. Industrial, wholesale and service businesses are eligible for a
loan from the fund.
b. No loan from the fund may be made to any bus i ness un 1 ess it is
located within the corporate limits of the City.
c. Eligible applicants must conform to small business standards set
by the Small Business Administration as follows:
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Service - Sales of less than $2.0 million
Wholesaler - Sales of less than $9.5 million
Manufacturer - Fewer than 250 employees
It is intended that RLF funds go primarily to existing businesses that
provide goods and services for export beyond the local market area and
thus create primary or basic employment opportunities through expansion.
.
2. Eligible Activities:
Land Acquisition
Plant Expansion
Equipment Acquisition
Inventory
Building improvements
No loan shall be made to meet working capital needs or to payoff
a business's creditors (i.e. a "bailout")
No loan shall be made to finance the purchase of an existing
business.
3. Compliance with National CDBG Objectives
In order to be eligible to receive an RLF loan, an applicant must be
seeking funds fQ)~ a project which compl ies with one of the following
National CDBG Objectives:
a. Low and Moderate Income Assistance through the creation and/or
retention of jobs which will be made available to low and moderate
income persons.
b. Prevention or Elimination of Slums or Blight through building
rehabilitation activities in blighted areas or in areas where
physical decay of buildings or blight exists on a spot basis.
BASIC LOAN CONDITIONS
1. The minimum loan from the fund shall be $10,000 and the maximum shall
be $200,000.
2. The interest on the loan shall be a matter of negotiation between the
City and the applicant but in no event shall the interest rate be less
than 3%.
3. Loans from the fund wi 11 be for a term of three years or more but in
no event shall the term of the loan exceed fifteen years.
4. The applicant must contribute to the project 2 dollars in private
financing (borrowed and/or eqUity) for every 1 dollar of RLF loan
funds.
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5. The borrower must put up a ml mmum of 10% of the total cost of the
project. Up to one-half of this amount (5% of total cost) could be
equity-in-kind (i.e. land, buildings, equipment or inventory) subject
to the approval of the Economic Development Council.
6. Each owner of twenty (20%) percent or more of the business and his or
her spouse shall sign personal guarantees assuring payment of "the loan
by the business.
LOAN EVALUATION CRITERIA
Applicants will be rated on these general criteria:
1. Economic Impact on the Community
Job creation and/or retention
Ratio of funds loaned to jobs created and/or retained
Salary range of jobs
Increases to the local property tax base by adding market value
to real property
Location in a designated Enterprise Zone or redevelopment area
2. Project Feasibility
Financial feasibility of the project; risk of loss; ability to
repay debt
Quality of business and/or marketing plan
Ratio of the privately funded portion of the project to the RLF
loan amount
RLF funding will be awarded by the City on a nondiscriminary basis and
no applicant will be denied an RLF loan on the basis of race, color,
creed, religion, national origin, sex, age or marital status.
ESTABLISHMENT OF REVOLVING LOAN FUND
The City shall establish an Economic Development Revolving Loan Fund at the
time of first payback of CDBG Business Financing Loans. The City will be
responsible for investment of loan funds, setting up a bookkeeping and loan
payback system and for monitoring payback of loans. The City departments
assigned to administer the Revolving Loan Fund program will be the Depart-
ment of Pl anni ng and Communi ty Development and the Department of Fi nance.
Each year the City shall conduct an evaluation of the Revolving Loan Fund
program in terms of policy guidelines and criteria and also an evaluation of
the performance of borrowers in terms of job creation, increase in tax base
and loan payback.
MONITORING AND REPORTING
The Salina Department of Planning and Community Development shall monitor
the activities of the Economic Development Revolving Loan Fund Program to
assure that all program requirements are being met by loan recipients.
This shall be accomplished as follows:
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1. The Department shall monitor the program by reQulnng loan recipients
to submit progress and financial reports, by conducting periodic
on-site inspections and by conducting a final audit of the recipient's
use of the loan proceeds.
2. The Department shall set aside two (2) to five (5) percent of the RLF
loan amount, depending on the size and complexity of the loan, to
cover administrative, legal and auditing expenses.
3. The Department shall require all loan recipients to submit a sioned
Statement of Assurances stating that the recipient agrees that it will
comply with:
A. The National CDBG Program Objectives.,
B. Title I of the Housing and Community Development Act of 1974, as
amended.
C. The following laws, regulations and requirements:
(1) Administrative and financial provisions of the CDSG Program.
(2) Federal Civil Rights and Equal Opportunity provisions.
(3) Federal Environmental Standards and Provisions.
(4) Federal Labor Standards and Provisions.
(5) Fair Housing Standards and Provisions
(6) Hatch Act of 1938, as amended.
(7) Kansas Acts Against Discrimination relating to fair
employment practices, to the extent applicable.
EFFECT OF THE PLAN AND SUBSEQUENT AMENDMENTS
The Economic Development Revolving Loan Fund Plan shall be in effect as the
official policy of the City of Salina upon adoption by the Board of City
Commissioners. The Plan shall provide guidance to city staff, the Salina
Area Economi c Deve 1 opment Counc i1 and the Ci ty Commi ss i on in the
administration and implementation of the loan program. The City Commission
may, from time to time, formally amend the Plan or portions of the Plan if
it is determined that the Plan is not adequately meeting community needs.
The City Commission may seek comments and recommendations from city staff
members, the Economi c Development Counc i1 and the genera 1 pub 1 i c pri or to
adopting any amendments to the Plan.
Attachment A
Supporting Materials
The applicant will be required to provide the following information when
applying for an RLF loan:
1) A fully completed and signed application, with documents required therein
attached.
2) A fully completed and signed financial statement by each personal
guarantor. The financial statement form is attached.
3) The federal income tax returns for the business and each personal guarantor
for the last three (3) years, whether calendar or fiscal years.
4) Letters of commitment form the designated official of the business.
5) Letters of commitment. from private financial sources.
6. Market and/or feasibility studies.
7) Financial pro formas for the next three (3) years.
8) Profit and loss statements or financial audits for the last three (3) years.
Loan Agreement Requirements
If an RLF loan is approwed. the following documents will be required:
1) A personal guaranty agreement to be signed by each persona 1 guarantor and
spouse.
2) Key person term life insurance on the principal personal guarantor.
3) If the applicant is a corporation, a resolution of the Board of Directors
authorizing the appropriate officers of the corporation to sign the various
loan documents on behalf of the corporation.
4) Loan Agreement and Securi ty Agreement, wi th Use of Loan Proceeds form
attached.
5) Promissory Note and Mortgage.
6) UCC financial statements for filing with the Secretary of State and the
Saline County Register of Deeds.
7) Documents confirming compliance with the Kansas Bulk Transfer Act, if
applicable.
8) Other relevant financial information or loan security documents requested
by the City Manager, the City Attorney, or any authorized representative of
the City of Salina, Kansas.
9) A Statement of Assurances by the recipient that it will comply with all
COBG regulations and applicable federal and state laws.
Application for Loan
Economic Development Revolving Loan Fund
City of Salina, Kansas
I. General Information
1.
Name of Applicant Business
Date of Request
2.
Business Address
Business Number
3. Names and addresses of all persons or corporations who would be obliga-
ted as either applicant or personal guarantors of loans:
Name
Address
4. Names and addresses of the principal officers and directors of the
business:
Name
Address
5. Nature of applicant's business:
6. Describe products to be assembled or manufactured, goods to be sold or
service to be rendered:
7.
Appl icant I s Attorney Phone Number
8.
Applicant's Accountant Phone Number
9. Amount of loan requested: $
1
10. Number of years to retire loan requested:
11. List other sources of financing:
12. List previous loans and credit references:
II. Use of Loan Proceeds
1. Amount requested for purchase of 1 and $
2. jl,mount requested for building renovation $
3. Amount requested for building expansion $
4. Amount requested for machinery and equipment $
5. Amount requested for i nven to ry $
6. Loan closing costs $
7. Administration $
III. Loan Proposal
1. Is the applicant presently located in the City of Salina?
2. Will the loan be used to expand or renovate an existing building?
(If yes, describe)
3. Name and address of contractor and/or architect:
4. What type of equipment or machinery if any will be financed?
5. If the applicant will be in direct competition with local firms
(a) Name the firms:
(b) Describe nature of the competition:
IV. Loan Analysis
1. Has the applicant investigated conventional financing?
(If yes, describe)
2. Can the applicant demonstrate that the planned project cannot be totally
financed through private lending sources?
3. What amount of additional financing has been arranged, either internally
generated or through private loans?
V. Proposed Location
1. Location of proposed project:
2
2. If project is a proposed expansion of replacement of another facilitYt
state size and location of current operations:
3. What percentage of the facility or building will be occupied by the
applicant:
4. Is the proposed project located in a designated enterprise zone or
redevelopment area?
5. Is the prospective location appropriately zoned? .
6. If a zoning change is pending, cite application number and present sta-
tus. If application has not been filedt briefly describe what change
will be needed and plans for submitting a rezoning application:
7. If unusual demands for water or sewer services or police or fire protec-
tion will be made, specify the demands:
VI. Ownership and Management
1. Describe the organizational structure of applicant (proprietorship,
partnership, subsidiary, corporation, etc.):
Note relationship to a parent company:
VII. Financial Responsibility
1. How many years has the applicant been in business?
2. What portion of the project is being financed from other company funds
(in addition to this loan)? $
Please explain
3. Attach performance statements for the first three (3) years of operation
after issuance of the loan, including revenue projectionst operating
expense projections and a debt amortization schedule.
VIII. Measure of Economic Growth and Benefit
1. What dollar amount of sales is contemplated? $
2. What percentage of sales will be sold locally?
3. What is the estimated amount of merchandise and services purchased
locally per year? $
~
~
4. How many people will the proposed project employ?
Type: Professional
Technical
Clerical
General Labor
5. Number of current full-time employees at applicant's present location:
6. What is ratio of loan fund dollars to jobs created?
$ /job
IX. In order to facilitate the timely processing of the application~ please
attach as part of the proposal the following items:
1. Certified copies of applicant's financial audits for the past three
years.
2. Applicant's most recent annual or quarterly financial report.
3. Interim financial statements, to date, for the current fiscal year.
4. A financial audit, current to date, for each personal g~arantor.
certified by a certified public accountant and the guarantor.
X. Applicant should be aware that additional financial data shall be required
if requested by the City Manager, City Attorney, or any other person author-
ized by the City of Salina including the Technical Review Committee.
XI. Attached hereto is a copy of the Supporting Materials and Collateral
Requirements for the Economic Development Revolving Loan Fund for
informationa 1 purposes. HOWEVER, APPLICANT ACKNOWLEDGES AND AGREES THAT
SAID REQUIREMENTS AS WELL AS THIS APPLICATION ARE A SET OF GUIDELINES AND
ANY OF THE PROVISIONS STATED THEREIN MAY BE WAIVED OR ADDED TO AT THE
DISCRETION OF THE SALINA CITY COMMISSION.
Signature
Date
Title
4
PERSONAL FINANCIAL STATEMENT
IMPORTANT: Relld the~ dIrections before completing this Statement.
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0: City of Salina
P. O. Box 736
Salina, KS 67402-0736
ATTN:
Director of Planning and Community Development
SECTION 1 - INDIVIDUAllNFORMA TION (T'i"Pe 01 Pnnt) I SECTION 2 - OTHER ?ARTY INFORMATION (Tyoe 0' P"nll
N....... I N.me
Res.oence AClO/e~s Res0<3el"lce AOQle"Sl
City, Sl.ite & Z,o C'Y. SI>'. &. Z.o
Po".1I0"'- 01 O<:C....~I.on POS.hOt" Ot Oc:CUO.iloOl'
Bu\ot\cn N,)~ I BV1.neu "'.VTU~
8v1.ness "OoO'C1.\ Bus""~'H AOOre'U
C'l'(. 5"'0 &. Zoo e.ly. SI.lIC 6. l.o
~e1 Pf'lOne aus P"'Cr"'e ne s PI"\Ol"\C Bus t'~e
SECTION 3. STATEMENT OF FINANCIAL CONDITION AS OF '9.
ASSETS I In Dollars I LIABILITIES I In Dollars
(00 not include Assets of doubtful value) (Omit cents) (Omit cents)
Casn on nanc and In tlanks see Scl"-edule G atd.c.:~d I NOtes payatl1e to DankS, secured I
US. Gov'!. & MarkelaDle Securlhes .. see ScneClule A I NOles paya01e to DankS. unsecured I I
Non.Mar,.ela01e Sccufll,es . See ScneOu1e B I Oue 10 orokers I
Securities ~eld Oy oroker In margIn accout1ts I AmounlS payaole to olne.s . secu.eO I
Resl1,c:ed or :Oril'OI SIOCkS I I AmounlS oayaOle 10 OlnerS . unsecured I
.:)ar":l';' inleres: In Ae3f ~s:a:e ::;::U1tle5 .. I I I Ac:oun1s and O,lIs due I I
see Sc~ecule C Un031d ,ncorT"oe fall: I I
Real ~s:a!e ']wned - se!! Schecu;e a I I I C\ner unpaid ta...es and Interest I 1
Leans Ae~e,vaOle I I I Real eSIJle rTXl(lga<;;es pay30le . I \
Autcr.-:colies and clt"ler oersOr"clL ::::'coert~ I I see Sc"eCule 0
C.3sn \/3/ue.;,fe l.nsu(ance~sc=~ SC:".~duiC e I I OIl""Cf Ct:Ots . .tem.(e' ..- I I
I
-otl~er asse~s .llcml.:e' I I I I I I
I I I ! !
I ! . I I
. I I I
TOT AL liABiliTIES I I !
NET WORTH I I -1
TOT AL ASSE TS I TOTAL LiAB. ANa NET wORTH I I
SOURCES OF INCOME FOR YEAR ~NOEO .19 PERSONAL INFORMA TION
Salary. bonuses & comm.SSQns S Co you nave a w,lt? II so. name 01 e<eculOI I
O,y.cendS
Real eSlate Income Ale yOu a parlne, or oll,ce( In any Oll'er venture' II so. OescIIOe.
OUICt Income (AJlmonY'. ct'lUd .....ppor1., 0.- .....-paof'lr1. m.lnl....."..roeoe I
I
""C~ n~ 1"l04 0.. ""'_"'-<S 11 you do l"\o01. _I''''' to h._ ~ Are you oOllgalco to P.Jy ,Jltmony. entia suonon or scp.Jrate maintenance
COl",.\d........:f .. . b.e.ta 104' ~r"'"'<J cnl. oollQ"'1on1 payments" If so. OCSCfloe.
Ale any assets p1e0geO Olner man as Oesclloed on scneou1es' II so. de;;cIIOe.
TOTAL S
CONTINGENT LIABILITIES
Do you have any conllngenllcat>lhhes? II so. deSCf.De Income lax sellleO In'ov9n (Oale)
Ale you a dc1enOanlln any swts or legal aCll0ns?
-
As ,ncorser, co.maker Of quatanlo(J S Person~1 Dank accounts ealfled al'
On leases 01 contraCls' S
legal Cla,ms s
all"'" soec.a' oenl S Have you eve' Dccn ocCI,}rcc:l oanJ...rvot' 11 ~. deSertDe'.
Arrounl 01 contested "'come la. hens S
(COMPLETE SCHEDULES AND SIGN ON REVERSE SIDE)
Re.o,det Irom IlUANA FINANCIAL. INC. Sloe\. Form No. C.l00AT 6'81
SCHEDULE A - U.S. GOVERNMENTS & MARKETABLE SECURITIES
Numocr 01 Shares . Are These Market
Ot Facc Value (Oooos) Oescr.oroon 'n Name 01 PlecQeo~ Value
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NumOer 01 Shar~s DCsc"phon In Nal11e01 Are Tnese Source 01 Value
P1eu!,I"C ~ Value
.
SCHEDULE B - NON-MARKETABLE SECURITIES
SCHEDULE C. PARTIAL INTERESTS IN REAL ESTATE EQUITIES
Address & r ype T,llc In ...01 Dale COSI M.1rkel MOrlQage Morlgage
01 PrOperly Name 01 Ownerslup ACCluueo Value Malu"'Y Amount
SCHEDULE D. REAL ESTATE OWNED
AdCress & Type T,lIe !n O.:Jle Ccst Market MOrlg:l]e Mortga.Qe
01 Propetly Name 01 ACQu.reo Value Malurlly Amount
I
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SCHEDULE E - LIFE INSURANCE CARRIED. INCLUDING N.S.L.J. AND GROUP INSURANCE
Name 01 Owner 01 Bene1lclary Face POliCY Casn Surrender
InsUlance Company POliCy Amount Loans Value
SCHEDULE F - BANKS OR FINANCE COMPANIES WHERE CREDIT HAS BEEN OBT AlNED
Name & AaCress Crea'lln Secure<.! Or 0"9,nal H19" Currenl
01 Lenaer r'le N.1I1t(! or Unsecvl(~O ., Dale CreC.r 8al.)nce
The Information contained In this statem~nt is provided for the purpose of obtaining. or maintaining credit with you on behalf of the
underslgne-d. or persons. firms or corporations in whose behalf the undersigned may either severally or jointly wllh others. execute a guaranty
In your favor. Each undersigned understands that you are relying on the information provided herein (Including the designation made as to
ownership of property) in deciding to grant or continue credl!. Each undersigned represents and warrants that the Information provided Is tn.",.
and complete and that you may consider this statement as continuIng to be true and correct unUI a wrlNen notice of a change Is given to you by
. the undersigned. You are authorlzed to make all Inquiries you deem necess.ary to verity the accuracy of the statements made herein. and to
determine my/our creditworthiness. You are authorized to answer questions about your credit experience with me/us.
STATE OF )
COUNTY OF ) 5S:
SUBSCRIBED AND SWORN TO BEFORE ME
Slgt'\3lure (IndiVidual)
BY
THIS
S.S. No
Dale 01 Blllh
day of
. 198.-.._
s.g""lu,C (Olhe. Patlyl
S S No
Date of BorCh
(SEAL)
Nocnry Public
Date Signed
19
.
. .
. . SCHEDULE G - CASH ON RAND AND IN DANKS
.
Name and Address of Name & type of Account. Names of all owners Balance on
Depository Certificate or Depo sit date of
financial
statement
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I
.
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Fillancial Proforma Statement
1989
1990
1991
Revenue Projections
Operating Expenses
Net Operating Income
Debt Service
- Private Financing
- RlF loan
Taxable Income
After-tax Earnings