NWIPDC Loan Fund
NWIPDC Economic Development Administration Revolving Loan Fund Program
The U.S. Department of Commerce Economic Development Administration has awarded Northwest Iowa Planning and Development Commission a revolving loan fund grant in the amount of $300,626. This grant requires local matching funds in the amount of 100,209. Businesses in seven of the nine counties served by NWIPDC are eligible to apply for low interest loans if their respective county is willing to provide the required local match. These seven counties include Lyon, Sioux, O'Brien, Clay, Buena Vista, Emmet and Palo Alto. These loans will be made to projects where conventional loans were not available and/or the complete amount of financing was not available. The primary goal of this revolving loan fund will be to increase quality employment opportunities in the seven eligible counties through the use of these low interest loans. The interest rate that will be charged is four percentage points below the current money center prime rate as quoted in the Wall Street Journal or the maximum interest rate allowed under State law, whichever is lower, but in no case may the interest rate be lower than 4%. This revolving loan fund will be governed by a loan board consisting of 14 members drawn from the seven participating counties. The membership will consist of one supervisor and one appointee from the business/banking community appointed by the board of supervisors from each county. Potential borrowers should contact NWIPDC to determine their eligibility for a loan.
The following will briefly introduce the program and inform users about its proposed guidelines:
- Ideally, all loan applications will be forwarded through existing county-wide economic development commissions;
- A minimum ratio of one permanent job created or retained for every $10,000 of RLF funds must be maintained. The NWIPDC target will be one job for every $7,500;
- The maximum loan amount shall be $150,000 (or the per capita allocation per county), the minimum loan amount shall be $5,000;
- Borrowers will be required to contribute a minimum of 10% personal or business equity into the project;
- Borrowers will be required to provide evidence that credit cannot be obtained from conventional lending sources;
- The maximum term of a loan will be 10 years with a portfolio target of five years;
- A first position is desired, but the loan review committee may negotiate lesser positions depending on the merits of the project;
The following is a partial list of ineligible activities:
- Public and quasi-public borrowers are not eligible to receive RLF assistance unless it directly benefits an identifiable business concern and there is reasonable assurance that financed activity will result in increased business activity.
- Private developers are not eligible unless the activity financed is non-speculative.
- Loans to borrowers for the purpose of investing in interest-bearing accounts.
- Borrowing to acquire an equity position in a private business.
- Borrowing to subsidize interest payments on an existing loan.
- Borrowing to provide the equity contribution required under other federal loan programs.
- Borrowing to acquire interest in a company, either through the purchase of stock or through the acquisition of assets, unless acceptable justification can be provided (example: saving it from imminent foreclosure).
- Refinancing existing debt, unless there is sound economic justification.