Revolving Loan Fund
The Central Alabama Regional Planning and Development Commission’s (CARPDC) Revolving Loan Fund (RLF), a locally controlled and flexible source of capital, supplies businesses and entrepreneurs with the gap financing needed start or expand their business in Autauga, Elmore or Montgomery Counties. The fund’s mission is to enable businesses to grow, create or retain permanent jobs and improve the local economy. The Fund is operated by the Loan Review Committee (LRC), a nine (9) member board appointed by each of CARPDC’s three (3) service counties. The CARPDC Board of Directors has the final authority over all RLF decisions and policies and procedures.
Since its inception in 2002, the RLF has loaned over $1,000,000 for nine (9) projects. These projects have added jobs and additional tax dollars to the local economy. The RLF recycles dollars, lending principal and interest repayments back to other small businesses in the area. The RLF can work with entities such as the Small Business Administration (SBA), the Alabama Small Business Development Center Network and the Southern Development Council to help supply the necessary dollars to ensure a business’s success.
For startups or expanding businesses needing financing, the RLF can help. The RLF does not, however, replace private lender financing. The program simply fills the gap between what a lending institution can provide, what the business can provide in equity and the projected project cost. RLF funding offers attractive financing packages to prospective borrowers to lower debt service through lower interest rates and longer terms.
FINANCE TERMS & CONDITIONS
Loan Amount – Revolving loans range from a minimum of $10,000 to a maximum of $150,000.
Interest Rate – The rate is generally fixed, but may be on a graduated schedule if approved by the LRC. Interest rates are determined solely by the LRC based on the application.
Term – Maximum term is 10 years, with working capital being five (5) years.
Collateral – Security is required. This may include liens on business or personal assets. In no case, shall collateralization of a loan be less than 125% of the loan amount.
Repayment – A monthly repayment schedule is developed generally in equal monthly installments of principal and interest. Any deviation from that schedule will be at the recommendation of the LRC.
STEP 1: DO YOU QUALIFY?
Eligible Businesses and Activities
- Applications may be submitted by any business or industry wishing to expand an existing operation or establish a new operation in Autauga, Elmore or Montgomery Counties. Those businesses must produce job growth, add economic value or enhance regional development potential.
- For CARDPC member governments, the RLF may provide interim construction financing when the government is operating under a state or federal grant and is awaiting reimbursement. Loans from $10,000 – $250,000 at no interest may be made, but not to exceed 12 months.
- Non-profit organizations seeking assistance with program operation, real property maintenance and/or construction activities may be considered for $10,000 – $350,000 at the prime interest rate with a term not to exceed five (5) years.
- Commercial projects are eligible, but must show that a significant economic development will be the result.
- Both the business and principal must be credit worthy and show sufficient cash flow generation to service the debt.
- Loans are on a first-come, first-serve basis and priority is given to projects which provide the highest economic stimulus relative to RLF program goals.
- Applicants shall not be disqualified based on age, race, religion, color, handicap, sex, physical condition, development disability, sexual orientation or national origin.
Program loans shall be available to eligible applicants for the following activities:
- The acquisition of land, buildings, and fixed equipment.
- Site preparation and the construction or reconstruction of buildings or the installation of fixed equipment.
- Clearance, demolition, or the removal of structures or the rehabilitation of buildings and other such improvements.
- The payment of assessments for sewer, water, street, and other public utilities if the provision of the facilities will directly create or retain jobs.
- To provide pollution or other environmental controls.
- Working capital (inventory and direct labor costs only).
Ineligible Businesses and Activities
Program loans shall not be available for the following businesses:
- Speculative investment companies.
- Real estate investment companies.
- Lending institutions.
- Gambling operations.
- Non-public recreation facilities.
- Other businesses not serving the interests of the Community.
Program loans shall not be available for the following activities:
- Acquisition of an equity position in a private business.
- Subsidization of interest payments on an existing loan.
- Providing the equity contribution required of borrowers applying for federal loan programs.
- Acquiring an interest in a business.
- Funding businesses relocating jobs from one (1) community to another.
- Soft costs such as design, promotional activities and legal fees.
- Reimbursement of any project expenses incurred prior to date of loan closing.
- Specialized equipment that is not essential to the business operation.
- Residential building construction or reconstruction (unless such reconstruction is intended to convert the building to a business or industrial operation).
- Routine maintenance.
- Professional services such as feasibility and marketing studies, accounting, legal, management services, and other similar services.
- Other activities the LRC may identify and deem ineligible.
To be eligible for funding, the proposed project must meet all of the following minimum requirements:
- Private Funds – The application show no less than 1/3 of the total project cost as cash/equity from non-RLF sources, such as private and/or public sector loans, borrower resources, and any combination of both. The equity injection must be at least 10% of the total estimated project cost. RLF participation in whole cannot exceed 1/3 of the total estimated project cost.
- Cost per Job Created – Every project must have a job creation or retention component. The RLF portfolio must maintain a cost per job ratio of at least 1:$10,000 loaned. Individual loans need to at least show a 1:$20,000 cost per job ratio.
- Financial Feasibility and Business Viability – The applicant must demonstrate the proposed project is viable and the business will have the economic ability to service the debt.
- Location – Activities financed under the Program must be located within Autauga, Elmore and Montgomery Counties.
- Compliance with Applicable Laws – Applicants shall comply with all applicable local, state, and federal laws and codes.
- Project Timeline – Project cannot start until the LRC has reviewed/approved the loan.
STEP 2: COMPLETE THE PREAPPLICATION
CARPDC Revolving Loan Fund Preapplication (use “Tab” key only to fill out form, then print, sign and mail)
Submit the preapplication, by hand, mail or email, to Steve Till at the address below for review. The preapplication will be reviewed to ensure the proposed project meets the RLF guidelines. If so, an invitation to make formal application will be extended. If not, a letter will be sent declining the request. The Preapplication review process will be complete within 10 business days.
STEP 3: COMPLETE THE FORMAL APPLICATION
CARPDC Revolving Loan Fund Application (use “Tab” key only to fill out form, then print, sign and mail)
STEP 4: MAIL/DELIVER APPLICATION
The completed application can be mailed or delivered to:
CARPDC Revolving Loan Fund
Attn: Steve Till
430 South Court Street
Montgomery, AL 36104
STEP 4: PROCESS, REVIEW & APPROVAL OF YOUR APPLICATION
Preliminary Review – Administrator and staff will review the application for completeness and verify that the proposed project meets the minimum requirements. All parts of the application will be reviewed and formatted for committee review. During this process, you may be contacted to request additional information and/or documentation. A determination will also be made if sufficient collateral exists, to warrant further project review by the committee.
Formal Review – The CARPDC LRC will review the application.
Negotiation of Terms – The Committee will negotiate terms for inclusion in the loan agreement.
CARPDC Board Approval – The full CARPDC Board must approve all loans.
Notice of Award – If the application is approved, a closing will be scheduled to execute the necessary loan documents.
Rejection of Award – If application is not approved, the Administrator will send a letter to the applicant stating reasons.
Call or come in today to see how the RLF Program can assist your start-up or expanding business!
For further information please contact Veronica Gray, RLF/Special Projects Manager, or call 334-262-4300.