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Home My WebLink AboutEconomic Development Loan Fund And Policies Augusta Richmond GA DOCUMENT NAME: E Co\\() n'\ \ c L:>e.-veJop f'rlcn-c Lao.x-", Y'-^'lcl O\\~'VO\'\C\e.S DOCUMENT TYPE: YEAR: g G BOX NUMBER: 1 Lt FILE NUMBER: I SC11l NUMBER OF PAGES: 38 I I I 'I I I I I I I I I. I' ; I I I. I I I I I' ~l " ;)J:F / ~J 1:7 -~dd- Economic Development Loan Fund anel Policies liIIIt\~t ........... ---~ ~-. August 6, 1996 Prepared for Augusta-Richmond County Commission-Council by The Department of Housing and Neighborhood Development 1" ~EB-25-98 01:59 PM HND.DEPARTMENT s" 7068211784 :'" .-... ; .;' ." ~..:r.:~!i.~Q^;i) . . . v~~\.~\ 13101171' - ..<:0'-'-1' .s ~ - ~- ~~ '-. ,:=-, ,-.... I';''':'C,,' I ~. ",,-:. ~"'.._... ,_ ~ ...1 .-..........~.!._" - . , . :996__- . . ~t~R.G~ C .'?_~~ ./.' ?- ~ .LL/ '. / er-:.P'- ...5~. AA' """'>-Ii , _.-- c:f7c / / / 99~ lEIOUSlNG& NF.1(;HRORH()On n~VF' .nPMJi' NATURE SAVER'. FAX MrMO 81616 ;:.;)- Tel TD Pho". , Pnone , fla' Honorable Larry E. Sconyers; Mayor Auqusta Richmond.County Consolidate Government Auqusta-Richmond County Municipal Buildinq 530 Greene Street Auqusta, Georqia 309011 Dear Mayor Sconyers: P.01 APPROVED OCT 0 1 1996 \~~~rNPj~I~?10~)..., I /821.1784 As you are aware, .the Auqusta .Richmond County Commission- Council approved the Economic Development Loan Fund policies and Procedures Manual at its meetinq on September 16, 1996. We appreciate the vote of confidence in the Policies and Procedures Manual and will worx with every effort to ensure its adherence. Please be advised that within the pOlicies under the Loan Administration Orqanization section, loan applications will be submitted as needed to a five (5) person Loan Review Committee. Pour (4) are to be drawn from the banking community and one (1) from the business community. several bankers assisted us in the development of these policies and expressed a desire to serve on the review panel. The other person has been contacted and aqreed to serve. They are as follows: Mr. James C. Hines Assistant Vice President Branch Manaqer First Union National Bank Mr. Willis V. Lanier BanJdnq Officer Sun Trust Banx Mrs. Dee Crawford OWner/Operator McDonald's Mr. Gordon Earwood Senior Vice President AlIi ed Bank Mr. Pat Blanchard President Georqia Bank i Trust Co. ,FEB-25-98 02:00 PM HND~DEPARTMENT 7068211784 P.02 .. Honorable Larry B. Sconyers, Mayor September 18, 1996 Page '!'wo If yoU or other Council-Commissioners have no objections, I ~uld lite for the above names to be considered as the initial review panel. If there is a problem with any of the above, you or any of the Council.Oommissioners can 8ubstitute, keeping in mind that the maximum number, as specified in the policies 1s five CS). Should YOu have any questions or comments, please do not hesitate to contact me. Sincerely, #<L- _ Keven J. Mack XJ'M/cs8 "'-.. .... Economic Development Loan Fund and Policies AD~STRATINEELEMENTSOFTHEPLAN LOAN ADMINISTRA nON ORGANIZA nON The ARCEDLF will be administered by the Augusta-Richmond County Housing and Neighborhood Development Department (HND) staff or a contracted agency. The staff or a contracted agency will publicize the availability of funds at least 60 days prior to the final date for applications when a competition is to be held. Management and technical assistance to po:ential borrowers will be available from the Housing and Neighborhood Development Department staff or a contracted agency during the application period. Application packages maybe picked up at that time in the office of the Housing and Neighborhood Development Department or at the office of the contracted agency (Appendix A is a sample application). Immediately after the application deadline, the HND staff or contracted agency will determine which applications meet eligibility requirements and are sufficiently complete to score using the adopted criteria. Loan applications will be submitted as needed to a five person Loan Review Committee consisting (5) private sector four (4) members drawn from the banking community and one (I) from the business community. The Augusta- Richmond County Commission Council will be the Executive Board of the ARCEDLF and will meet at least quarterly to be updated on the progress and accomplishments of the program. The Loan Review Committee will review each proposal as to its financial soundness and submit a written subjective evaluation from an undelWriting perspective. After consideration of the input from the Loan Review Committee, the HND staff or a contracted agency will score and rank the applications. The ranking will then be compared to the funding availability and a recommendation will be prepared as to which proposals should be approved. A list will be submitted to the Commission-Council at the next subsequent meeting for their approval. After approval of the Commission-Council, the successful and unsuccessful applicants will be properly notified. The notice to successful applicants shall outline the procedures for closing the loan and any closing documents needed such as the note security agreement, UCC- I, the deed to secure debt, and guarantees. A loan agreement as outlined in appendix B shall also be included with this correspondence. STAFF CAPACITY/OPERATION OF SIMILAR PROGRAMS The HND sraff or a contracted agency possesses skills in the areas of business, fmance, marketing, credit analysis, loan packaging, and loan servicing. The staff or a contracted agency will be in charge of the day-to-day operation of the ARCEDLF and will report directly to Commission-Council during the quarterly ARCEDLF meeting. The staff or a contracted agency will be responsible for preparing loan summaries for review by the loan review committee as meetings are needed. The staff or a contracted agency will also be responsible for keeping the minutes of each loan review committee and ARCEDLF Board meeting. LOAN SELECTION AND APPROVAL PROCESS Recipients of funds from the ARCEDLF will be selected through an annual competition. A competition will be held between April and July in each program year CDBG funds will be available. A second competition may be held in November or December dependent upon the availability of funds. Page 3 >-- -.,FEB-2S-98 01: S9 PM HND-+DEPARTMENT 7068211784 P_01 APPROVED 'i' . . ,.:*---' . ~l,?R_C.V. ~.~?' ~..5 ~ ~ p~ OCT 011996 ~O~{~. &~fc;HRO~&'~ ~W'nPM1i"NfjA\~ft~rNlf!~!S~I~~I., NATURE SAVER'. FAXMfMD 0151& ::-J.- I 1821.1784 Tel Pnone , Fax' / , Pho'" , -.. '.. ~ ." ~~:"I~~-~Q^;O' . . . ~v.~~- \73'-l17r -.~OV-1' ~. >~ .... . r ... " ,,;,r:t... I ~. . .....~ ~ -..'.... - ~.. ~ ....' ,~"la-...~'_" _ TI FIX , Honorable Larry E. Sconyers, Mayor Auqusta Richmond.County Consolidate Government Auqusta.Richmond County Municipal Buildinq 510 Greene Street Auqusta, Georqia 309011 Dear Mayor Sconyers: As you are aware, the Auqusta -Richmond County Commission- Council approved the Economic Development Loan Fund policies and Procedures Manual at its meetinq on September 16, 1996. We appreciate the vote of confidence in the Policies and Procedures Manual and will work with every effort to ensure its adherence. Please be advised that within the pOlicies under the Loan Administration Orqanization section, loan applications will be submitted Is needed to a five (5) person Loan Review Committee. Pour (4) are to be drawn from the banking community and one (1) from the business community. Several bankers assisted uS in the development of these policies and expressed a desire to serve on the review panel. The other person has been contacted and aqreed to serve. They are as follows: Mr. James C. Hines 'Assistant Vice President Branch Manaqer First Union National Bank Mr. Willis V. Lanier Bankinq Officer Sun Trust Bank Mr. Gordon Earwood Senior Vice President Allied Bank Mr. Pat Blanchard President Georqia Bank' Trust Co. Mrs. Dee Crawford OWner/Operator McDonald's FEB-25-98 02:00 PM ." HND-+DEPARTMENT 7068211784 P.02 " Honorable Larry B. Sconyer~, Mayor September 18, 1996 Page '!'wo If yoU or other Council-commissioners have no objections, I 1lIOuld lilte for the above names to be considered as the initial review panel. If there is a problam with any of the above, you or any of the Council-Commissioners can substitute, keeping in mind that the maximum number, as specified in the policies 1s five (5). Should YOU have any questions or corranents, please do not hesitate to contact me. Sincerely, #<L-_ Keven J. Mack XJ'M/cs8 '''~'' )";. Economic Development Loan Fund and Policies ADM~STRATNCELEMENTSOFTHEPLAN LOAN ADMINISTRATION ORGANIZATION The ARCEDLF will be administered by the Augusta-Richmond County Housing and Neighborhood Development Department (HND) staff ora contracted agency. The staff or a contracted agency will publicize the availability of funds at least 60 days prior to the final date for applications when a competition is to be held. Management and technical assistance to potential borrowers will be available from the Housing and Neighborhood Development Department staff or a contracted agency during the application period. Application packages may be picked up at that time in the office of the Housing and Neighborhood Development Department or at the office of the contracted agency (Appendix A is a sample application). Immediately after the application deadline, the HND staff or contracted agency will determine which applications meet eligibility requirements and are sufficiently complete to score using the adopted criteria. Loan applications will be submitted as needed to a five person Loan Review Committee consisting (5) private sector four (4) members drawn from the banking community and one (1) from the business community. The Augusta- Richmond County Commission Council will be the Executive Board of the ARCEDLF and will meet at least quarterly to be updated on the progress and accomplishments of the program. The Loan Review Committee will review each proposal as to its financial soundness and submit a written subjective evaluation from an underwriting perspective. After consideration of the input from the Loan Review Committee, the HND staff or a contracted agency will score and rank the applications. The ranking will then be compared to the funding availability and a recommendation will be prepared as to which proposals should be approved. A list will be submitted to the Commission-Council at the next subsequent meeting for their approval. After approval of the Commission-Council, the successful and unsuccessful applicants will be properly notified. The notice to successful applicants shall outline the procedures for closing the loan and any closing documents needed such as the note security agreement, UCC- I, the deed to secure debt, and guarantees. A loan agreement as outlined in appendix B shall also be included with this correspondence. STAFF CAP ACITYlOPERA TION OF SIMILAR PROGRAMS The HND staff or a contracted agency possesses skills in the areas of business, fmance, marketing, credit analysis, loan packaging, and loan servicing. The staff or a contracted agency will be in charge of the day-to-day operation of the ARCEDLF and will report directly to Commission-Council during.the quarterly ARCEDLF meeting. The staff or a contracted agency will be responsible for preparing loan summaries for review by the loan review committee as meetings are needed. The staff or a contracted agency will also be responsible for keeping the minutes of each loan review committee and ARCEDLF Board meeting. LOAN SELECTION AND APPROVAL PROCESS Recipients of funds from the ARCEDLF will be selected through an annual competition. A competition will be held between April and July in each program year CDBG funds will be available. A second competition may be held in November or December dependent upon the availability of funds. Page 3 I I Economic D.evelopment Loan Fund and Policies I AD~STRA~ELEMENTSOFTHEPLAN I LOAN ADMINISTRATION ORGANIZATION I The ARCEDLF will be administered by the Augusta-Richmond County Housing and Neighborhood Development Department (HND) staff or a contracted agency. The staff or a contracted agency will publicize the availability of funds at least 60 clays prior to the final date for applications when a competition is to be held. Management and teclmical assistance to potential borrowers will be available from the Housing and Neighborhood Development Department staff or a contracted agency during the application period. Application packages may be picked up at that time in the office of the Housing and Neighborhood Development Department or at the office of the contracted agency (Appendix A is a sample application), I I I Immediately after the application deadline, the HND staff or contracted agency will determine which applications meet eligibility requirements and are sufficiently complete to score using the adopted criteria. Loan applications will be submitted as needed to a five person Loan Review Committee consisting (5) private sector four (4) members drawn from the banking community and one (l) from the business community. The Augusta- Richmond County Commission Council will be the-Executive Board of the ARCEDLF and will meet at least quarterly to be updated on the progress and accomplishments of the program. The Loan Review Committee will review each proposal as to its financial soundness and submit a written subjective evaluation from an underwriting perspective. I I After consideration of the input from the Loan Review Committee, the HND staff or a contracted agency will score and nink the applications. The ranking will then be compared to the funding availability and a recommendation will be prepared as to which proposals should be approved. A list will be submitted to the Commission-Council at the next subsequent meeting for their approval. I After approval of the Commission-Council, the successful and unsuccessfuI' applicants will be properly notified. The notice to successful applicants shall outline the procedures for closing the loan and any closing documents needed such as the note security agreement, UCC- I, the .deed to secure debt, and guarantees. A loan agreement as outlined in appendix B shall also be included with this correspondence. I I STAFF CAPACITY/OPERA nON OF SIMILAR PROGRAMS I The HND staff or a contracted agency pOssesses skills in the areas of business, fmance, marketing, credit analysis, loan packaging, and loan servicing. The staff or a contracted agency will be in charge of the day-to-day operation of the ARCEDLF and will report directly to Commission-Council during the quarterly ARCEDLF meeting. The staff or a contracted agency will be responsible for preparing loan summaries for review by the loan review committee as meetings are needed. The staff or a contracted agency will also be responsible for keeping the minutes of each loan review committee and ARCEDLF Board meetIng. I LOAN SELECTION AND APPROVAL PROCESS I Recipients of funds from the ARCEDLF will be selected through an annual competition. A competition will be held between April and July in each program year CDB,G funds will be available. A second competition may be held in November or December dependent upon the availability of funds. I I Page 3 I FEB-25-98 01:59 PM HND+DEPARTMENT 7068211784 .P.01 APPROVED .-./..:a-.1CHMONO. 'c' . . ",,, -".- -- 0 'v~...;.'-"1J"17n.... v~. ~ it, ~-: ~~ ..,. ..- I.. . , fit!:.W:C,. ..' . .'-:1- ~-~~ ~~.~I_.~ ..~' ~;~?' ~.._:? ~ ~p~ &c/ / . /996 HOUSING.& NF.IGHRORHOon n~V1Ji" .nPMIi' -. ... . .. NATURE SAVER'. FAX MrMO 01516 ::+- . . _. ;996__-. . ~I:~R_G ~ Tel pnone , Ph.". f fll f HonoraQle Larry E. Sconyers, Mayor Auqusta Richmond-County Consolidate Government Auqusta-Richmond County Municipal Building 530 Greene Street . Auqusta, Georqia 309011 / Dear Mayor Sconyers: As you are a'-'are, the Augusta -Richmond COunty Convnission. Council approved the Economic Development lIoan Fund pOlicies and Procedures Manual at its meeting on September 16, 1996. We appreciate .the vote of confidence in the Policies and Procedures Manual and will work with every effort to ensure its adherence. Please be advised that within the policies under the Loan Administration Orqaniiation section, loan applications will be submitted as needed to a five IS} person Loan Review.Committee. Pour (4) are to be drawn from the banking community and one (1) from the business community. several bankers assisted uS in the development of these policies and expressed a desire to serve on the review panel. The other person has been contacted and agreed to s~rve. They are as follows: Mr. James C_ Hines Assistant Vice President Branch Manaqer First Union National Bank Mr. Willis V. Lanier Banking Officer Sun Trus t Bank Mr. Gordon Earwood Senior Vice President Allied Bank Mr. Pat Blanchard President Georqia Bank , Trust co. Mrs. Dee Crawford OWner/Operator McDonald' s. . FEB-25~98 02:00 PM HHD....DEPARTMEHT 7068211784 P.02 Ronorable Larry B. Sconyers, Mayor September 18, 1996 Page Two ,/ / /- /' ./ / / /" If yoU or other Council.Commissioners have no obj ections, I / would lilte for the above names to be considered as the in! t1al ,I review panel. If there is a probl8ftl with any of the above, you or.:' any of the Council-Commissioners can Substitute, keepinq in min~ that the maximum nwnber, as specified in the policies tsf1ve (5/1'/. . Y Should YOU have any questions or comments, please do ~ot hesitate to contact me. / Sincerely, #~- Keven J. Mack KJM/cS8 ------J.c~~)::,\k,,~.~"'_LJ >__4:. ~~ ~ ~ FEB-25-98 01: 59 PM HND"'DEPARTMENT 7068211784 P.01 ." ~)>:ti~~ijQNO' . . . V~~""'-'\1:J..mr ...~O"-1' ~ a "}iii- ,. .,. _;...-. I...... ~ ,~:.w;c,.. I ~. . ..~~ "'""\-)A... . -' ....' ,........,&a~..,_.. .. ~;p.~? ~..~ ~ ~ p'>l &t:;J / /996 HOUS~. & NF.lc;HRORHoon n~V1i" .nPMli' APPROVED OCT 0 1 1996 \~1tf~~'~~IS~I~~l. . I ,821.1784 j ) to' .. .... ~ TI :-+- Tel NATURE SAVER'. FAX MfMO 0151& . . ,;996__... . ~[~R,C:-vo. Pnon~ , Phone , Faa , Honorable Larry E. Sconyers, Mayor Auqulta Richmond-County Consolidate Government . Auqusta-Richmond County Municipal Buildinq 530 Greene Street Auqusta, Georqia 309011 Dear Mayor Sconyers: As you are aware, the Auqusta-Richmond County Commission- Council approved the Economic Deyelopment Loan Fund Policies 'and Procedures Manual at its meetinq on September 16, 1996. We appreciate the vote of confidence in the Policies and Procedures Manual and will work with every effort to ensure ita adherence. Please be advised that within the pOlicies under the Loan Administration Orqanization section, lean applications will be submitted as needed to a five (5) person Loan Review Committee. Pour (4) are to be drawn from the bankinq community and one (1) from the business community. several bankers assisted us in the development of these policies and expressed a desire to serve on the review panel. The other person has been contacted and aqreed to serve. They are as fOllows; Mr. James C. Hines Assistant Vice President Branch Manaqer Pirst Union National Bank Mr. Gordon Earwood Senior Vice President Allied Bank Mr. Willis V. Lanier Bankinq Officer Sun Trust Bank Mr. Pat Blanchard President Georqia Ban~' Trust Co. Mrs. Dee Crawford oWner/operator McDonald's _FEB-25~98 02:00 PM (<!"i HND-..DEPARTMENT . 7068211784 P.02 ;:- Honorable Larry B. Sconyers, Mayor September 18, 1996 paqe Two If yoU or other Council.commissioners have no objections, I lfOuld lilte for the above names to be considered as the in! tial review panel. If there is a problem with any of the above, you or any of the Council-Commissioners can Substitute, keepinq in mind that the maximum number, as specified in the POlicies. 1s five (5). Should YOU have any questions or comments, please do not hesitate to contact me. Sincerely, ~--I'LL ~ // - Keven J. Mack XJM/C88 ..~ - ... "^- ... Economic Development Loan Fund and Policies ADMINlSTRA TIVE ELEMENTS OF THE PLAN LOAN AD MINI STRA TION ORGANIZATION The ARCEDLF will be administered by the Augusta-Richmond County Housing and Neighborhood Development Department (HND) staff or a contracted agency. The staff or a contracted agency will publicize the availability of funds at least 60 days prior to the final date for applications when a competition is to be held. Management and technical assistance to po:ential borrowers will be available from the Housing and Neighborhood Development Department staff or a contracted agency during the application period. Application packages may be picked up at that time in the office of the Housing and Neighborhood Development Department or at the office of the contracted agency (Appendix A is a sample application). Immediately after the application deadline, the HND staff or contracted agency will determine which applications meet eligibility requirements and are' sufficiently complete to score using the adopted criteria. Loan applications will be submitted as needed to a five person Loan Review Committee consisting (5) private sector four (4) members drawn from the banking community and one (1) from the business community. The Augusta- Richmond County Commission Council will be the Executive Board of the ARCEDLF and will meet at least quarterly to be updated on the progress and accomplishments of the program. The Loan Review Committee will review each proposal as to its financial soundness and submit a written subjective evaluation from an underwriting perspective. After consideration of the input from the Loan Review Committee, the HND staff or a contracted agency will score and rank the applications. The ranking will thenbe compared to the funding availability and a recommendation will be prepared as to which proposals should be approved. A list will be submitted to the Commission-Council at the next subsequent meeting for their approval. After approval of the Commission-Council, the successful and unsuccessful applicants will be properly notified. The notice to successful applicants shall outline the procedures for closing the loan and any closing documents needed such as the note security agreement, UCC- I, the deed to secure debt, and guarantees. A loan agreement as outlined in appendix B shall also be included with this correspondence. STAFF CAPACITY/OPERATION OF SIMILAR PROGRAMS - The HND staff or a contracted agency posse.sses skills in the areas of business, fmance, marketing, credit analysis, loan packaging, and loan servicing. The staff or a contracted agency will be in charge of the day-to-day operation of the ARCEDLF and will report directly to Commission-Council during the quarterly ARCEDLF meeting. The staff or a contracted agency will be responsible for preparing loan summaries for review by the loan review committee as meetings are needed. The staff or a contracted agency will also be responsible for keeping the minutes of each loan review committee and ARCEDLF Board meeting. -- LOAN SELECTION AND APPROVAL PROCESS .... Recipients of funds from the ARCEDLF will be selected through an annual competition. A competition will be held between April and July in each program year CDBG funds will be available. A second competition may be held in November or December dependent upon the availability of funds. - .... Page 3 - I I I I I I I I I I I I I I I I I I I Table of Contents PROGRAM ELEMENTS OF THE PLAN .................".......,..................... GOALS AND OBJECTIVES .........,.................,.................,......... IDENTIFICA TION OF FINANCING PROBLEMS WITHIN THE AUGUSTA RICHMOND COUNTY AREA .....................................,.................,...,............. 2 TARGETING CRITERIA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . " 2 ADMINISTRA TIVE ELEMENT OF THE PLAN ,'...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 3 LOAN ADMINISTRATION ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . .. 3 STAFF CAPACITY/OPERATION OF SIMILAR PROGRAMS......,.................... 3 LOAN SELECTION AND APPROVAL PROCESS ..............:.,.........,........... 3 MERIT FACTORS CONSIDERED , . . . . , . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 LOAN SERVlCING ...........,.......,..,.....................,.................... 5 ELIGIBLE LOAN RECIPIENTS ,...................................................... 5 INELIGIBLE LOAN RECIPIENTS.........,..... ....,.........,....,............ ...... 5 USE OF LOAN PROCEEDS. . . . . . , . . . . , . . . . . . . . . . . . . . . . . . . . . . , . . , . . . . . . . . . . . . . . . . . . . .. 7 INELIGIBLE LOAN PURPOSES. . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 CREDIT STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . . , . , . , . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . .. 8 LOAN RECOMMENDATIONS . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . , . . . , . . . . . . . . . . .". . . . . . . " 10 TYPES OF LOANS TO BE MADE ...,.......,................,....................... 11 FINANCING POLICIES/PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " II FINANCING POLICIES. .............,..,..............................,............ 14 RELATED ACTIVlTIES ......................".......................,............. 13 OTHER REQUIREMENTS ............................................."........... 13 ALTERING POLICIES/PLAN ',.........,............................................ 14 U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (HUD) FACTORS CONSIDERED IN ECONOMIC DEVELOPMENT LOANS .................,........................ 14 CREDIT FAcTORS CONSIDERED .......,..................,........................ 15 TYPES OF SECURITY, GUARANTEED, AND COLLATERAL NEEDED.................... 15 I I I I I I I I I I I I I I I I I I I CDBG PROJECT REQUIREMENTS ...........................,........................ 15 DELINQUENT LOANS ....................,.,..,.........,............,............ 16 COLLECTION LOANS ........,..... .'. . , . . . . . , . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16 LOAN AMENDMENT REQUEST. . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16 APPENDIX A, ....,...... ......... .'......"............,............................. 17 AUGUSTA-RICHMOND COUNTY - ARCEDLF LOAN PROCESS,........................ 17 APPENDIX B ..................,...,......,....................................... 18 AUGUSTA-RICHMOND COUNTY ARCEDLF APPLICATION CHECKLIST. . . . . . . . . . . . . . . .. 18 APPENDIX C ...,....... .. . . .. . . , . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . .. 24 LOAN AGREEMENT. . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24 I I Economic Development Loan Fund and Policies I PROGRAM ELEMENTS OF THE PLAN I Goals and Objectives I The Augusta-Richmond County Commission Council has a goal to reduce the historic high unemployment rate and low per capita income in Augusta-Richmond County, In accordance',the Augusta-Richmond County has created the Augusta-Richmond County Economic Development Loan Fund (ARCEDLF) to assist eligible areas with the retention, expansion, and creation of private sector employment opportunities. I I The following objectives are to be reached through the creation and availability of the ARCEDLF, I. To retain existing jobs and create new jobs. I 2. To increase the per capita income of Augusta- Richmond County. 3. To increase the tax base of Augusta-Richmond County. I 4. To overcome specific gaps in local capital markets that inhibit firms from obtaining suitable credit within the Augusta-Richmond County service area. , I 5. To provide employers with capital for start-up and/or expansion of locally owned businesses in order to stabilize and to diversify the economy within the Augusta-Richmond County service area. I 6. To redevelop and/or recycle blighted or vacant land and facilities in order to put them to productive economic use. I 7. To assist businesses which are owned and/or operated by women, by minorities, or by persons who are economically or socially disadvantaged. 8. To implement other state and federal economic development loan programs in conjunction with ARCEDLF funds. I 9. To make available capital for manufacturing and service companies, especially if they utilize new technologies. I 10. To achieve economic diversification of area businesses into the field of manufacturing, construction, and retail and wholesale services in Augusta-Richmond County. II. To utilize the minimum amount of public funds in order to leverage the maximum amount of private funds. I 12. To assist eligible neighborhoods in developing local lending programs that will compliment the ARCEDLF, 13. To sustain growth and viability of the fund through the identification of potential sources of additional capital. I I I Page 1 I I I Economic Development Loan Fund and Policies I These objectives will be met by making loans to prospective entrepreneurs who have not been able to acquire any fmancing or complete financing from conventional sources. These loans will promote the development of new businesses and expansion of existing businesses which will create and/or retain jobs that would have otherwise been lost in Augusta-Richmond County. I I IDENTIFICATION OF FINANCING PROBLEMS WITHIN THE AUGUSTA-RICHMOND COUNTY AREA I Based upon experience gained through the current operation of our recaptured Urban Development Action Grant Loan Program, the Mayor'and Commission-Council have identified several gaps in the local fmancing environment which have created hardships upon small businesses. These gaps are: I I. Conservative lending practices (such as requiring high equity, desiring short-term loans, and preference towards existing businesses). 2. High interest rates which discourage fmancing. I 3. Reluctance to participate/lack of expertise in participating in federal business development programs. I 4. Loans are made to preferred customers, which rarely include smaller businesses. I ARCEDLF will be a fmancing entity which will attempt to fill these gaps making loans of moderate interest rates to small businesses in order to cultivate economic expansion, job creation or retention and/or the prevention of business failure. ARCEDLF loans will be made, when possible, in conjunction with other federal programs and with somewhat more moderate lending practices (s()mewhat lower equity, longer-term loans, and towards new businesses). Other efforts to bridge this gap will include accepting a wider range of credit and security arrange~ents, fmancing potentially failing businesses to retain jobs, and considering innovative ideas and products. I TARGETING CRITERIA I Due to the limited amount of the ARCEDLF, Augusta-Richmond County will focus its resources upon areas of Augusta-Richmond County with high unemployment, low per capita income, or those suffering from chronic distress. Preference for approval will be to applicants which create and retain the largest number of permanent jobs for low and moderate income persons at the lowest cost per job. All enterprises must be located within specified areas of Augusta-Richmond County. I I I I I I Page 2 ..1 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies ADMINISTRATIVE ELEMENTS OF THE PLAN. LOAN ADMINISTRA nON ORGANIZA nON The ARCEDLF will be administered by the Augusta-Richmond County Housing and Neighborhood Development Department (HND) staff or a contracted agency. The staff or a contracted agency will publicize the availability of funds at least 60 days prior to the final date for applications when a competition is to be held. Management and technical assistance to pOlential borrowers will be available from the Housing and Neighborhood Development Department staff or a contracted agency during the application period. Application packages may be picked up at that time in the office of the Housing and Neighborhood Development Department or at the office of the contracted agency (Appendix A is a sample application). Immediately after the application deadline, the HND staff or contracted agency will determine which applications meet eligibility requirements and are sufficiently complete to score using the adopted criteria. Loan applications will be submitted as needed to a five person Loan Review Committee consisting (5) private sector four (4) members, drawn from the banking community and one (I) from the business community. The Augusta- Richmond County Commission Council will be the Executive Board of the ARCEDLF and will meet at least quarterly to be updated on the progress and accomplishments of the program. The Loan Review Committee will review each proposal as to its fmancial soundness and submit a written subjective evaluation from an underwriting perspective. After consideration of the input from the Loan Review Committee, the HND staff or a contracted agency will score and rank the applications. The ranking will then be compared to the funding availability and a recommendation will be prepared as to which proposals should be approved. A list will be submitted to the Commission-Council at the next subsequent meeting for their approval. After approval of the Commission-Council, the successful and unsuccessful applicants will be properly notified. The notice to successful applicants shall outline the procedures for closing the loan and any closing documents needed such as the note security agreement, UCC- 1, the deed to secure debt, and guarantees. A loan agreement as outlined in appendix B shall also be included with this correspondence. STAFF CAPACITY/OPERATION OF SIMILAR PROGRAMS The HND staff or a contracted age.Dcy possesses skills in the areas of business, fmance, marketing, credit analysis, loan packaging, and loan servicing. The staff or a contracted agency will be in charge of the day-to-day operation of the ARCEDLF and will report directly to Commission-Council during the quarterly ARCEDLF meeting. The staff or a contracted agency will be, responsible for preparing loan summaries for review by the loan review committee as meetings are needed. The staff O!, a contracted agency will also be responsible for keeping the minutes of each loan review committee and ARCEDLF Board meeting. LOAN SELECTION AND APPROVAL PROCESS Recipients of funds from the ARCEDLF will be selected through an annual competition. A competition will be held between April and July in each program year CDBG funds will be available. A second competition may be held in November or December dependent upon the availability of funds. Page 3 I I Economic Development Loan Fund and Policies I The purpose of the competition will be to compare proposals from a broad range of applicants and award funds to those that best further the program goals and objectives. Objective and subjective criteria will be used to make the comparisons. A scoring system has been developed that will allow the staff or a contracted agency to review the proposals and advise the staff or'a contracted agency on the fmancial feasibility of each proposal. I I The following are the criteria which will be utilized to evaluate each loan proposal and the points assigned for each criteria. Each proposal will be scored using this system and the gross scores should provide a good analysis of the extent to which the proposal furthers the program goals and objectives. The criteria are: I 1. . CDBG dollars per low/moderate job created or retained (documentation needed). Score is relative to other applications, and higher if the ratio of dollars per job is low. (0-25 points) I 2. Jobs created in target areas. (0-20 points) 3. Financial feasibility of loan proposal. (0-20 points) I 4, Total low/moderate and other jobs created. (Measure of the overall community economic impact.) (0-5 points) I 5. Economic impact (other than jobs) :,n target areas. (0-5 points) 6. CapitaVreal estate tax base expansion. (0-5 points) I 7. New business start. (0-5 points) I 8. Potential for CDBG funds to stimulate future development beyond the initi_al impact. (0-5 points) 9. Minority/women owned businesses. (0-5 points) I 10. Low-moderate jobs include training so that job skills will be acquired that would lead to advancement and/or self- employment. (0-5 points) I MERIT FACTORS TO BE CONSIDERED I. Increase or retain employment of low and moderate income individuals. I 2. Improve the County's tax base by increasing tax ratable property. I 3. Assist neighborhood revitalization. 4. Assist opportunities for minority and female owned or operated businesses. I 5, Increase desirable trade and commerct:. 6. Assist in the revitalization of historic commercial, industrial or mixed-use property. I I Page 4 I I I Economic Development Loan Fund and Policies I LOAN SERVICING I The HND staff or a contracted agency is responsible for the administration, monitoring, and servicing of loans from the time of loan approval through full repayment. The staff or a contracted agency will monitor the loan agreement and the borrower's business activities for defaults in covenants and will maintain a loan payment schedule, with payments posted as to principal and interest, Delinquencies in payments will be addressed by telephone, mail, or personal visits from the HND staff or a contracted agency. Delinquencies may be resolved by loan restructuring, a moratorium on payments, or other techniques upon approval of the ARCEDLF Loan Review Committee. Delinquencies which remain unresolved will be declared a default and foreclosure procedures will be initiated. . I I I A project calendar system will be maintained on each loan in the portfolio to assure that valid hazard insurance and life insurance is in place as agreed upon, fmancial statements received, and UCC- I financing statements are continued every five (5) years as required by law. I ELIGIBLE LOAN RECIPIENTS I Generally, any for-profit corporation, partnership, or sole proprietorship shall be eligible to apply for financing. This description shall include, and be limited to the following: Credit worthy commercial and industrial property owners or tenants who are able to document the need for ARCEDLF. I . For-profit institutions, excluding rdigious or religious sponsored institutions, carry on a business activity for the purpose of obtaining pecuniary benefit, for its members, in the operation of their otherwise eligible small business concerns. I . Start-ups of small businesses with a minimum of 20% cash equity injection is contemplated, and contingent upon verification of industry experience, adequate security, and completion of specified technical assistance training. I . Prior to approval, all candidates for fmancing shall show evidence of, or provide for adequate accounting and collection functions, proper receivable and inventory (where applicable) control functions, and satisfactory billing and collections systems. I I INELIGIBLE LOAN RECIPIENTS I · Applicants who are unable to document the need for ARCEDLF funds by providing two (2) bank denial letters that identifies why the bank will not fmance the project or why only a portion of the required fmancing was obtained. . Non-Profit institutions: If the applicant is a charitable institution or other non-profit enterprise ( i.e., churches, etc.), I . Newspapers, publishers, and broadcasting-stations~ If applicant is a newspaper, magazine, book publishing company, radio broadcasting company, television broadcasting company, or similar enterprise. Note: The reason for this prohibition is to avoid the possibility of accusation of Government infringement on freedom of the press, and the communication of ideas and infonnation which might tend to influence public I I Page 5 I I I EconomicDeve/opmimt Loan Fund and Policies I opinIOn. "Similar enterprises" would include producers of educational, political or sociological Films, publications, training aids, or other materials, which could mold or influence public opinion. I · Gamblers: If any part of the annual gr05s income ( including rental income) of the applicant (or any of its principal owners) is derived from gambling activities, except in those cases where an otherwise eligible small business concem obtain less than 1/3 0' its annual gross income ( either at loan inception, or during loan term) from: I I I. Its income or commissions from the sale of official state lottery tickets under a state license; or 2. Its gambling activities in those states where such activities are legal with the state. I . Individuals or organizations who hold real property for sale or investment, except in designated business improvement districts where property is to be leased to otherwise eligible business concerns I Individuals or organizations who wish to relocate a business: Loan proceeds may not be used to relocate an existing business, unless the relocation is for a sound business purpose, such as the following: I {, consolidating operations in one location; I 2. locating closer to major consumers; 3. avoiding unreasonable burdens upon operation of business at its present location; or I 4. locating closer to a source of basic materials or transportation facilities. I However, in no event shall loan proceeds be granted for business relocation if the relocation would result in one of the following: I \, the move would cause serious unemployment in the present location; I 2, the move would nullify a labor union contract, or a commitment to negotiate a collective barga~ing agreement; or 3. the move wpuld involve substantial loss or exp~nse to either party to an effective outstanding lease. I . Applicants with a seriously delinquent credit history will not be accepted. . All city officials and employees directly involved with the ARCEDLF Program. NOTE: Said officials and employees can become eligible after leaving office or prop-ram for one (I) year/ I . All Loan Review committee Members, employees and inimediate family members. I I Page 6 I I I I I I I I I I I I I I I I I I I I &onomic Development Loan Fund and Policies USE OF LOAN PROCEEDS Proceeds of the loan are to be used in Augusta-Richmond County, Georgia to fmance development projects, establishment of new businesses and/or the expansion of existing businesses, creation of employment opportunities and/or retention of existing jobs. To the maximum extent possible, applicants should use the labor of low-income persons. Loan funds may be used for, but not limited to: ), Business acquisitions, construction, conversion, enlargement, repair, modernization, or development cost. 2. Purchasing and development of land, easements, rights-of-way, building, facilities, leases, or materials. 3. Purchasing of equipment, leasehold improvements, machinery, or supplies. 4. Pollution control and abatement. 5, Transportation services 6. Start up operating costs, working capital. 7, Feasibility studies. 8. Reasonable fees and charges. Authorized fees include loan packaging fees, environmental data collection fees, and other professional fees rendered by professionals generally licensed by individual state or accreditation associations, such as engineers, architects, lawyers, accountants, and appraisers. The amount of fee will be what is reasonable and customary in the community or region where the project is located. Any such fees are to be fully documented. INELIGIBLE LOAN PURPOSES Loan proceeds may not be used for the following: 1. For the transfer of ownership unless the loan will keep the business from closing, or prevent the loss of employment opportunities in the area, .Jr provide expanded job opportunities. 2. For community antenna television services or facilities. '3, For any legitimate business activity when more than 10 percent of the annual gross revenue is derived from legalized gambling activity. 4, For any illegal activity. 5. For any otherwise eligible project that is in viQlation of either a Federal, State or Local environmental protection law or regulation or an enforceable land use Festriction unless the flDancial assistance required will result in curing or removing the violation. , 6, For any hotels, motels, tourist homes, or convention centers. Page 7 I I I I I I I I I I I I I I I I I I I &onomic Development Loan Fund and Policies 7. For any transit, recreation, or amusement centers. CREDIT STRUCTURE All opportunities to be favorably considered by the Loan Review Committee must have a well-written and thorough Credit Memorandum with fmancial statements and spread sheets attached. The Credit Memorandum should include at minimum, the following: I. BACKGROl.J.MQ;, Include a brief history of the organization (i.e., when and where founded, nature of products or services, sales territory, typical customers, main suppliers, derivation of revenues and percentages from various products and/or services, and on-going projects and backlog ( if applicable). 2. MANAGEMENT: Include the background of principals and/or owners (including tenure with the organization, age, educational background, technical background, prior work experience, credit relationship with their bank, character, competence, depth of management in general, and major stockholders (if privately held). Discuss job delineation, availability of back-up, and management succession. 3. MARKET ANALYSIS: Discuss the size/maturity of the market. Is the industry and its market growing, or is it in the mature phase of its product life cycle? Are there any cyclical or seasonal influences; regulatory or legal considerations? Discuss competitions and the applicants's relative strengthslweaknesses. Comment on any competitive advantages or market niches which the company has. How significant are they? 4. LOAN REQUEST: Briefly, detail the amount and purpose of the loan request, along with the repaYment program and source of repayment. There should be a repayment or reduction agreement on practically all loans made. ' 5. CREDIT RELATIONSHIPS: Identify other creditor relati::mships, comment specifically on the experience of these other creditors and the circumstances surrounding those previous and/or existing relationships. Include comments on the applicant's relationship with suppliers. Also, include comments on the credit history of the principle - a formal credit report may be necessary (including explanations of late payments). 6. FINANCIAL ANALYSIS: Comment on the company's financial performance to date. A description of the strength of the credit should be outlined. Include earnings history and net worth (3 to 5 years, if available), cash flow and pro forma data (projections), fmancial data on endorsers or guarantors. On loans where the fmancial condition of the borrower or guarantor is the strength of the credit, mention hiSlher net worth ( your estimate of it, not just what is shown on the financial statement), his/her liabilities, and the nature of hislher principal assets. Briefly, mention any contingent liabilities ( if significant in relation to the borrowers's net worth). Whenever possible, briefly mention the amount and type of other financing from banks and other like creditors. Also state whether experience has been satisfactory or not on each. 7. COLLATERAL/SECURITY: Collateral analysis may include the following: INVENTORY Account Receivables Aging Customer list Page 8 I I Economic Development Loan Fund and Policies I . Insurability of inventory Inventory breakdown I . Inventory storage requirement Potential for obsolescence, perishability, in inventory, etc. . I PERSONAL GUARANTY I . Completed and current Personal Finance Statement (including contingent liabilities) Description of guarantor's personal assets Income and debt service capability . . I OTHER (WHERE APPLICABLE) I · Copy of Lease Market value of negotiable securities · Copy of life insurance policy · Existing policy loans · Appraisal of fIxed asset I 8. REPAYMENT RISKS I Comment upon the following: . What can go wrong for the? The Industry? What can go wrong with our loim (volatility of repayment sources)? What can we do about it? I . . I 9. PROJECT COST ANALYSIS I Equipment, construction and property acquisition loans shall be supported by industry staildard estimates (i. e., other equipment store estimates, construction cost estimates based on reference manuals, and property appraisals). EQUIPMENT LOANS I Loans secured by equipment should manire within the lesser of the following: . The useful life of the equipment; or Seven (7) years I Generally, loans should be no more than the following: I . 90% of the wholesale cost of the new equipment 85% of the liquidation value of used equipment . I Specialized equipment should be appraised by qualifIed personnel. I Page 9 I I I &onomic Development Loan Fund and Policies I F or any equipment of a specialized nature, a higher down payment should be required because of the limited market for such equipment. I The cost of equipment should be supported by a copy of the appraisal, purchase order or invoice and exclusive of the following: I . Transportation cost Commissions I The staff or contracted agency officer should verify and evidence that borrower has insurance in acceptable amounts for the following: I . Property damage insurance on property and equipment to be fmanced; and FulI coverage for existing equipment . I LOAN RECOMMENDA nONS I . Loan Recommendations from HND 's staff or contracted agency officers on why loan is being recommended to the Loan Review Committee. I At minimum, in order to prepare a credit memorandum and process an application, the folIowing information must be provided by all eligible clients: · Business Financial Statements I Interim Report (less than 90 days-existing businesses only) I Income statement and balance sheet (last 2 years~existing businesses only) Financial projection (2 years) I Monthly cash flow statement (first 12 months) Narrative assumption to fmancial projections and cash flow analysis I Owners Information Personal financial statements I Tax returns (last 2 years) I Resume of key officers, or summary of key officers's business experience . Brief Projection Description I Business history overview, outline of products or services, marketing and distribution program, geographic service area I Page 10 I I I Economic Development Loan Fund and Policies I Amount of loan request and itemization of use of proceeds I A source and use statement identifying the project's total cost and source of fmance, . Project Cost Estimates I Two (2) estimates of equipment to be purchased. I At least two (2) different contractor estimates on construction projects ( if applicable) Lease Agreement ( proposed arrangement) or land/building purchase agreement ( if applicable) I Two (2 ) letters from lenders detailing the results of the applicants request for a loan (direct loan applicants) I Bank commitment letter ( loan participation applicants) If the business is a franchise, include a copy of the Franchise Agreement, and the Franchisor's FTC Disclosure Statement. I A copy of Articles of Incorporation or Partnership Agreement for corporation or Partnership I TYPES OF LOANS TO BE MADE I DIRECT LOANS: A direct loan may be provided to applicants within the targeted areas of Augusta- Richmond County if applicant is not able to secure a market rate loan for the total fmancing needed. The maximum amount of loans available is $20,000 at an interest rate to be established based on the projects' cash flow to be repaid monthly over a term to exceed five (5) years LOAN PARTICIPATION: Project funds may be committed to participate in large loans (usually $20,000 or more) with other fmancing entities ( i.e., SBA throughout the Community Development Impact Area (CDlA). Loans may be made to small businesses ( when needed) to assist them in meeting local injection needs. No more than 10% of the total fmancing shall be provided from the ARCEDLF. I I I The loan is to be repaid in principal and interest in equal monthly installments at a term no, longer than that of the longest participating lender ( 10 Years maximum), Loans to SBA assisted activity can only be made if ARC has an adopted method of allocating administrative costs under which the CDBG expenditures for such costs are not chargeable to loans made with SBA funds. FINANCING POLICrES I The ARCEDLF will be administered in accordance with the following policies: I I. The terms of the ARCEDLF loans will be as short as possible, usually no longer than 10 years for fixed assets and usually no longer than 5 years for non-fixed asset loans. I 2. Interest rates on ARCEDLF loans will normally be at the Prime Interest rate prevailing at the time the loan is processed. I Page 11 I I I &onomic Development Loan Fund and Policies I I 3, Upon the approval of the loan, each applicant who receives a loan from the ARCEDLF will be charged a processing fee equal to 1% of the total amount of the ARCEDLF loan, or $500.00, whichever is greater. This processing fee may be deducted from the amount to be loaned to the borrower, I 4. - Attorney fees charged in connection with the loan closing may also be deducted from the loan amount. I 5. The Commission-Council, upon recommendation of the staff or a contracted agency, may modify the term s of this contract or make temporary adjustments to its provisions upon fmding that the applicant has temporary difficulties that could realistically be resolved by such actions, I 6, In the determination of collateral requirements, the ARCEDLF administrative board will take into consideration the merits and potential economic benefits of each applicant's project. ARCEDLF financing may be secured by liens or assignment of rights in the assets of the borrowing company. In order to encourage fmancial participation by other lenders, the ARCEDLF's lien position may be subordinated to liens securing other Loans made in connection with the project. Hazard insurance assignments will be required on all collateral securing loans to the ARCEDLF. The ARCEDLF may also require security in the fonn of assignment of patents and licenses, the acquisition of other forms of insurance, and such other additional s~curity as the administrative board may consider necessary to secure a loan. Loan requests submitted by closely held corporations, partnerships, or proprietorships dependent for their continuing success on certain individuals will ordinarily be expected to provide and assign to the ARCEDLF life insurance on these key persons. Personal guarantees will be required from all principal owners with 20% or more ownership. I I I 7. All proceeds from interest payments and principal will be returned to the ARCEDLF for additional loans. I 8. Whenever feasible, the HND staff or f contracted agency will use other state and federal finding in lieu of or in conjtmction with ARCEDLF funds. . 9. The minimum loan amount shall be $5,000 and the maximum loan amount shall be $20,000. I 10. The HND staff or a contracted agency presents the application to the ARCEDLF Loan Review Committee for their consideration. The Committee evaluates the application and makes the decision, by majority vote, to approve or disapprove the application. The Committee may make its approval contingent on the applicant's fulfilling certain special conditions. ' I I II. If the Loan Review Committee disapproves a loan application, the applicant is so informed, and recommendations may be made to the applicant for further action. If the Loan Review Committee approves the loan application, the applicant is also informed of any special conditions, I 12. After satisfactory resolution of any special conditions, the loan closing is held and funds are disbursed in accordance with the loan agreement. In addition to the standard closing documents needed for any closing, such as the Note, Security Agreement, UCC-l, the Deed to Secure Debt, and guarantees, the staff or a contracted agency shall also obtain a loan agreement as outlined in Appendix B. I I I Page 12 I I I I I I I I I I I I I I I I I I I I &onomic Development Loan Fund and Policies RELA TED ACTIVITIES In addition to making loans, the Augusta-Richmond County Housing and Neighborhood Development department will aid businesses through the following forms of assistance: 1. Technical and management Assistance The HND staff or a contracted agency will assist businesses in obtaining the technical and management assistance provided by various federal, state, and local government agencies. 2. Loan Packaging- and Referral Service The HND staff or a contracted agency will assist applicants in packaging loans so as to encourage private sector financial participation. The HND staff or a contracted agency will also assist small businesses and industries in obtaining fmancing from other public and private sources whenever feasible. OTHER REQUIREMENTS I. Civil Rights No applicant or potential applicant is to be denied a loan on the basis of race, color, national origin, age. religion, sex, or handicap. This is to be assured through minority representation on.the Loan Review Committee and through an outreach program including the following elements: 2. Notice of ARCEDLF availability is to be given to: a. Community minority leaders or organizations. b. Community women leaders or organizations. c. Local radio and television stations that provide public service announcements. d. Area newspapers. To assure that borrowers will not discriminate against employees or applicants for employment on the basis of race, color, national origin, age, religion, sex or handicap, applicants will submit information concerning their civil rights status and involvement in any complaints, lawsuits or other charges of discriinination and information concerning the racial composition of their work force. Applicants will also be required to provide a statement of compliance with all applicable state and federal civil rights laws and regulations. The ARCEDLF will have direct minority representation on its Loan Review Committee to assure that minority groups are included in the process of establishing and administering lending practices. Page 13 I I Economic Development Loan Fund and Policies I 3. Environmental Considerations I All projects to be considered for funding will adhere to environmental performance standards. No project will be approved which produces an insurmountable harmful alteration of the environment. I 4. Flood Hazard Insurance I Borrowers will obtain the required flood hazard insurance, which must be applied for prior to loan closing or disbursement if necessary, 5. Access for the Handicapped I Applicants must comply with all requirements for providing adequate access to the handicapped if covered under the American's with Disabilities Act as amended (ADA). I 6. Reporting Requirements I The staff or a contracted agency will submit an annual report to the full Augusta-Richmond County Commission-Council. ' AL TERING POLICIES/PLAN I This plan for the Augusta-Richmond County Economic Development Loan Fund cannot be altered without consent of a majority vote of Commission-Council in an open meeting, I U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) FACTORS CONSIDERED IN ECONOMIC DEVELOPMENT LOANS I In consideration to whom HND or the contracted agency will make loans, from the ARCEDLF, the applicant(s) proposed loan should result in O:le or more of the following: I I. Increase or retain employment. 2. Improve the Augusta-Richmond County's tax base by increasing tax rateable property. I 3. Assist neighborhood revitalization. 4. Assist opportunities for minority and female-owned or operated business. I 5. Increase desirable trade and commerce, I 6. Assist in the rehabilitation of historic commercial, industrial, or mixed-use property. I I Page 14 I I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies CREDIT FACTORS CONSIDERED 1. Willingness and ability to pay is required. 2. No loans are made in cases where state, local or federal tax liens, or back taxes exist. 3. Personal and business credit history must be good. Previous credit delinquency is not necessarily disqualifying, if accounts have been re-established in credit-worthy condition, and the ability to repay is apparent. 4. Soundness of the existing or proposed business enterprise will be considered ( i.e., available cash flow must be evident). TYPES OF SECURITY, GUARANTEE, AND COLLATERAL NEEDED 1. Personal and business guarantees of loans are required. 2. Chattel mortgages, liens and mortgages are taken or placed to provide collateral of the greatest possible security . 3. The security interest (collateral position) of the ARCEDLF Program may be made subordinate to the interest of other lenders ( i.e., banks or the SBA) in order to secure total project financing. 4. Face value of life insurance on asset loans. CDBG PROJECT REQUIREMENTS HND staff or a contracted agency shall make a Necessary and Appropriate Determination on all private for-profit businesses before assistance is provided. HND staff or a contracted agency will determine eligibility of the assistance based on the federal national objectives - benefit to low and moderate income area, creation or retention of jobs for low and moderate income persons, or elimination of slum and blight . For each business assisted under low and moderate area be~efit, the HND staff or a contracted agency shall maintain documentation of boundaries of the service area and income data on the service area. ' . For each business assisted under iob creation for low and moderate income persons or iob. retention for low and moderate income persons, the HND staff or a contracted agency shall complete and maintain job creation forms or job retention forms. In addition, HND staff or a contracted agency shall maintain documentation verifying that in the absence of CDBG assistance, the jobs would be lost. . For all jobs, HND staff or a contracted agency shall maintain, or have access to documentation on family-size and household income for each person holding a job. This documentation must be applicable to the holder before the assistance was provided HND staff or a contracted agency shall report on job creation/retention to Augusta-Richmond County Commission Council on a quarterly basis. Page 15 I I &onomic Development Loan Fund and Policies I . For each business assisted under addressinl!- slum and blight on an area basis, HND staff or a contracted agency shall maintain records on the boundary of the area, and a description of the conditions which qualify the area. For each business assisted under addressing slum and blight on a spot basis, HND staff or a contracted agency shall maintain records on the description of the specific blight or physical decay being treated. I I DELINQUENT LOANS I I All delinquent loans will be serviced by the HND staff or a contracted agency. A delinquent loan is considered delinquent 45 days after loap payment is du.-. A late charge (4% of any installment of principal and/or interest) may be charged at the-discretion of the HND staff or contracted agency if payment is not received by HND staff or contracted agency 15 days after such installment is due. I COLLECTION LOANS I All loans that have been ~ed over to a collection attorney will be serviced by the attorney and not ARCHND's staff or a contracted agency loan officers. I LOAN AMENDMENT REQUEST I Any request from borrowers seeking changes to the initial loan tenns ( i.e., moratorium on loan payments, loan assumptions, etc.) shall be approved by a quorum of the Commission-Council. The borrower shall provide ARCHND staff or the contracted agency with detailed supporting infonnation (business and personal). I I I I I I I Page 16 I I I Economic Development Loan Fund and Policies I I (APPENDIX A) I AUGUSTA - RICHMOND COUNTY ECONOMIC DEVELOPMENT LOAN FUND (ARCEDLF) Loan Process The following items will be needed to process your loan request: I 1. Personal Financial Statement I 2. Fiscal year end Financial Statements for the previous three years, 3. Current Financial Statements, no older than 90 days for the current year. I 4. Financial Statements for the previous three years of all affiliates, includes any businesses principals have ownership in. I 5. Two years projections with narrative. (Fonn Enclosed) I 6. Monthly Cash Flow Projection for the fIrst year. (Start-Up Only) (Fortn Enclosed) 7. Tax Returns for the past three years for all principals. I 8. History of Business. 9. Resume of Manager/Owner. I 10. Sales contract (if real estate or business being purchased). I 11, Copy of Lease if premises are leased, 12. Construction Bid or Contract on site improvements. I 13. Copy of Vendor quotes showing Machinery, Equipment, Furniture, or Fixtures to be purchased. 14. Copy of Franchise Agreement. I 15. Copy of Articles oflncorporation (if applicable). I 16, 'Statement by applicant describing business ability and'why applicant thinks business will succeed. I I Page 17 I I I Economic Development Loan Fund and Policies I APPENDIX B I AUGUSTA - RICHMOND - ARCEDLF APPLICA nON FOR LOAN I. REQUEST:: I Date: Amount of Loan Request: $ I Tenn Requested II. GENERAL INFORMATION: I I Name of Borrower: Operating Name (if different): Corporation, Partnership, or Proprietorship? I I How Long? Date Established: New or Existing Business? Type of Business: Alter Ego? Name of Alter Ego: A,ddress of Project: I City: County: State: _ Zip: I Phone #: Minority Borrower? HI. ECONOMIC IMPACT: I A. Job Impact: # Retained + # Created Total Loan Amount $ divided by $5,000 = Jobs I Meets Job Requirements? I Low moderate income jobs to be Created B, Community Project: If the project does not meet the job requirements, attach a separate justification for qualification, I I Page 18 I I '1 1 I Economic Development Loan Fund and Policies lV. USE OF PROCEEDS Land Acquisition.,. $ I I Land Improvements.., $ ConstructionlRenovation Cost... $ Purchase Existing Land & Building... '$ I 1 I Purchase Machinery and Equipment... $ I I I Purchase Furniture and Fixtures... $ Working Capital... $ Inventory... $ Debt Consolidation... $ Professional Fees... $ Interim Interest... $ Other $ TOTAL PROJECT COST... $ I r. SOURCES OF FUNDS _% $ _% $ _% $ _% $ I I TOTAL SOURCES OF FUNDS... 100,0% $ I rv. COLLATERAL The colJateral offered to secure this loan is as follows: I I (I) (2) $ $ Page 19 I I I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies (3) $ $ TOTAL COLLA TERAL OFFERED,., GuaranteeslLife Insurance/Other: VII. INDEBTEDNESS Furnish the following information on all installment debt owed by the business or in relation to the business: Original Present Payment To Whom Amount Date Balance Amount Matures Security III. MANAGEMENT/OWNERSHIP List all proprietors, Partners, officers, directors, and holders of stock, 100% ownership must be shown: Name Social Security # Complete Address Owned % IX, BANKING RELA TrONSHIP Name of Current Bank: Address: Bankers Name: Phone #: Page 20 I I Economic Development Loan Fund and Policies I x. AGREEMENTS AND CERTIFICA nON I I Tbe applicant agrees, to the maximum extent possible, to use labor of low-income persons. The applicant certifies that neither they nor members of their families hold any legal or financial interest in the Augusta-Richmond County Commission- Council, nor does any Commission-Council member own any legal or financial interest or influenCe with the applicant. The undersigned assures that it does and/or will at all tiines comply with Title VI of the Civil Rights Act of 1964, "Nondiscrimination in Federally Assisted Programs," (42 U.S.C. 2000d - 2000d-4) and that it will not discriminate on the basis of race, color, religion, national origin, age, physical or mental handicap, sex or marital status with respect to its day to day operations. The applicant certifies by signing that the proposed ,business is located within Augusta-Richmond County, Georgia. The applicant certifies that the financing they are requesting is not available from other federal,state, or private sector programs. The applicant certifies that those facilities under its ownership, lease or supervision which will be utilized in the accomplishment of the project noted above are not listed on the Environmental Protection Agency's (EPA) List of Violating Facilities. The undersigned will notify Augusta-Richmond County of the receipt of any communication from EP A of activity indicating that the facility is under consideration for listing on the Violating Facilities list. I I I Xl. CERTIFICATION I The undersigned hereby certifies that all information contained above and in exhibits attached hereto are true rand complete to the best knowledge and belief of the applicant and are submitted for the purpose of inducing Augusta-Richmond County to consider hislher financial request. This also certifies that Augusta-Richmond County, Housing and Neighborhood Department staff is authorized to check the applicant's credit and employment history and to ask questions about their experiences with the applicant for the pwposes of considering the fm:.:ncial assistance requested in this application. Whether or not the financial assistance herein applied for is approved, applicant agrees to pay for the cost of any survey, title or mortgage examinations, appraisals, etc., performed by non-Augusta-Richmond County personnel with consent of the applicant. I I APPLICANT SHALL IMMEDIATELY NOTIFY THE AUGUSTA - RICHMOND COUNTY HOUSING At:ill NEIGHBORHOOD DEVELOPMENT DEPARTMENT OF ANY CHANGE IN OR ADDITION TO THE INFORMATION ABOVE. I I BY: TITLE: I ATIEST: (SEAL) TITLE: I I I I Page 2] I I I Economic Development Loan Fund and Policies I (FOR INTERNAL USE ONLY) I AUGUSTA-RICHMOND COUNTY ARCEDLF APPLI.CA nON CHECKLIST I Applicant Contact Person Tel. # I All items that are checked are enclosed: I General: I, Loan Summary I 2. Repayment Analysis I Forms and Otber Requirements: I. Application for Business Loan I 2. Personal Financial Statement I Financial Information: I I, Fiscal year end Financial Statements for the previous three years. 2. Current Financial Statements, no older than 90 days for the current year. I 3, Financial Statements for the previous three years of all affiliates, includes any businesses principals have ownership in, I 4, Two years projections with narrative, 5, Monthly Cash Flow Projection for the first year. (Start-Up Only) I 6, Tax Returns for the past three years for all principals. I I Page 22 I I I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies Loan Information: I, History of Business,. 2, Resume of Manager. 3. Sales contract (if real estate or business being (purchased.) 4. Appraisal from acceptable appraiser on land and building being offered as collateral. 5. Collateral Analysis 6. Copy of Lease if premises is leased. 7. Construction Bid or Contract on site improvements. 8, Copy of Vendor quotes showing Machinery, Equipment, Furniture, or Fixtures to be purchased. 9, Copy of Franchise Agreement. 10, Copy of Articles oflncorporation (if applicable), Page 23 I I I I I I I I I I I I I I I I I 'I I Economic Development Loan Fund and Policies APPENDIX C LOAN AGREEMENT TIllS AGREEMENT, made as of the between 1996, by and (hereinafter referred to as "Borrower"), and , organized and existing under the Laws of the State of Georgia (hereinafter referred to as "Lender"); WITNESETH WHEREAS, Borrower desires to acqujre funds for leasehold improvements; purchase of machinery, equipment, furniture, and fixtures, and the refinance of existing debt. WHEREAS, Lender has agreed upon the tenns set forth herein to lend Borrower the amount of (the "Loan") for the purposes set forth above; and WHEREAS, Borrower and Lender wish to enter into this Agreement in order to more particularly set forth the tenns and conditions of the Loan to be extended to Borrower by Lender; NOW, THEREFORE, for the mutual covenants herein contained and other valuable consideration, the receipt and adequacy whereof are hereby acknowledged, Borrower and Lender hereby covenant and agree as follows: (I) Status of Borrower: Borrower does hereby certify to Lender that, as of the date of this Agreement, Borrower has full power and authority to consummate the transactions contemplated by this Agreement. (2) Loan Documents: Borrower has duly authorized, executed and delivered to Lender its Note (hereinafter referred to as the "Note") of even date herewith, in the principal amount of Page 24 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies The indebtedness evidenced by the Note is secured by a security deed, security agreement, UCC-l, UCC-2, and personal guaranties. The Note and all other documents are sometimes hereinafter collectively referred to as the "Loan Documents" and are incorporated into this Agreement by reference. (3) Warranties of Borrower: Borrower hereby warrants to Lender as follows: (a) That this Agreement and the Loan Documents are in all respect legal, valid, binding and enforceable according to their terms, subject to the bankruptcy laws and other laws of debtor relief and grant to Lender a valid and enforceable lien against the property described in the security agreement. (b) That the consummation of the transactions hereby contemplated and the performance of the obligations of Borrower under and by virtue of the Loan Documents will not result in any violation of, breach of, or constitute a default under any mortgage, security deed, deed of trust, lease, bank loan, credit agreement, assi,gnment, any other secur1ty instrument, or any other instrument or agreement to which Borrower may be bound or affected. <0 That there are no actions, suits or proceedings pending or to the knowledge of Borrower, threatened, against or affecting Borrowers, or any of Borrower'S property, either real or Personal, or involving the val idity or enforceability of any of the Loan Documents or the priority of the lien or security interest thereof, at law or in equity, or before or by any governmental authority, and Borrower is not in default with respect to any order, writ, injunction, decree or demand of any court of any , governmental authority. (d) That Borrower has no knowledge of any violatipns or notices of violation of any federal law or any law of any state, any county or municipal ordinance or any order or requirement of any governmental authority having jurisdiction affecting the Borrower, Borrower'S property or the conduct Page 25 I ,I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies Page 26 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies Page 27 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies Page 28 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies shall be given reasonable notice of each such inspection, U) To furnish to Lender all instruments, documents, certificates, business plans, appraisals, insurance, reports and agreements and each and every other document and instrument required to be furnished to Lender by the terms of the Loan Documents or this Agreement. (k) To do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement, including using the proceeds of the loan in a timely manner. (I) To provide Lender with financial information concerning Borrowers in form and frequency satisfactory to Lender, which shall include, but not be limited to, annual financial statements of the Borrower (including a balance sheet and profit and loss statements) certified 'to by the Borrower. (m) To pay to Lender a late charge of 4% of any installment of principal and/or interest not received by Lender within 15 days after such installment is due. 5, Default. An event of default shall be deemed to have occurred hereunder if: (a) Any default or event of default occurs under any ofth~ Loan Documents; or (b) Borrower breach or fail to perform, observe or meet any covenant or condition of the Loan Document or this Agreement; or ~ Any warranties made herein or in any of the Loan Documents shall be breached by Borrower or shall prove to be false or misleading; or (d) Any I ien for labor, material, taxes or otherwise shall be fi led against the 'property of Borrowers which is not discharged, released by bonding, or otherwise disposed of in such fashion as is acceptable to Lender within ) 5 days of the filing thereof; or (e) Any suit shall be filed against Borrower which, if adversely determined, could substantially Page 29 I, I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies cumulatively to exercise all other rights, options and privileges provided by law. (b) Borrower agrees, upon the request of Lender, to permit Lender: (I) To perform or cause to be performed any and all work and labor necessary to preserve and protect the property described in the Security Agreement. (7) Application for Loan - Borrower affimis that all of the representations made and facts presented by Borrower in its Revolving Loan Fund Application to Lender are, as of the date of this Agreement, true, accurate and correct and Borrowers acknowledge that they shall continue to be bound by all agreements and certifications made by Borrowers in said Revolving Loan Application, all of which is incorporated herein by reference af!d whichshall survive the closing of the Loan. (8) Rights of Third Parties - All conditions of the obligations of Lender hereunder, are imposed solely and exclusively for the benefit of Lender and its successors and assigns and no other person shall have standing to require satisfaction of such conditions in accordance with their terms. In particular, lender makes no representations and assumes no obligations as third parties. In this connection, Borrower agrees to and shall indemnify Lender from any liability, claim or losses resulting from the disbursement of the Loan proceeds. (9) Relationship of Parties - No express or implied term, provision 16H or condition of the Loan Documents or this Agreement shall, or shall be deemed, to constitute Borrower and Lender as partners or joint ventures. (10) Evidence of Satisfaction of Conditions - Any condition of this Agreement which requires the submission of evidence of the existence or non-existence of a specified fact or facts, implies as a condition the existence or non-existence, as the case may be, or such fact or facts, and Lender shal1, at al1 times, be free independently to establish to its own satisfaction and in its absolute discretion such Page 31 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies existence or non-existence. (II) ~ - Borrower may not assign this Agreement or any of its rights or obligations hereunder or under the Loan Documents without the prior written consent of Lender, (12) Successors and Assigns Included in Parties - Whenever in this Agreement, one of the parties is named or referred to, the legal representatives, successors and assigns,.of such parties shall be included and all covenants and agreements contained in this Agreement by or on behalf of Borrower or Lender shall bind and inure to the benefit of their respective heirs, legal representatives, successors and assigns, as the case by be, whether so expressed or not, subject to the provisions of Section II hereinabove. (13) Headings - The headings of the sections of this Agreement are for the convenience of reference only, and are not to be considered a par~ hereof and shall not limit or otherwise effect any of the terms hereof. (14) Invalid Provisions to Effect no Others - If fulfillment of any provision hereof or any transaction related hereto, at the time performance of such provision or transaction shall be due, shall involve transcending the limit of validity prescribed by law, ipso facto the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement in whole or in part., then such clause or provision only shall be held for naught, as though not herein contained, and the remainder of this Agreement shall remain operative and in full force and effect. (15) Amendments - Neither this Agreement nor any provision hereof may be changed, waived. discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or terminate is sought. (16) Counterparts - This Agreement may be executed in any number of counterparts, each of which Page 32 I I I I I I I I I I I I I I I I I I I Economic Development Loan Fund and Policies shall be deemed to be an original and all of which ~hall comprise but a single instrument. (17) Governing Law - This Agreement is made under and shall be governed by and construed pursuant to the laws of the State of Georgia. (18) Notices - All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: I f to Borrower: I f to Lender: The Borrower and the Lender may, by notice given to all parties to this agreement, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Page 33 I I I I I I I I I I I I I I I I I I ,I Economic Development Loan Fund and Policies IN WITNESS WHEREOF, Borrower and Lender have hereunto executed these presents on the date first above written. Borrov,'er: BY: As its President ATTEST: As its Secretary (Corporate Seal) Augusta-Richmond County: BY: ATTEST: (Seal) Signed, Sealed & Delivered In The Present Of: Notary Public, Richmond County Georgia My Commission Expires: Page 34