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PURPOSE
The purpose of the program is to provide financing to economically disadvantaged business owners or potential business owners. The loan proceeds are to be used for the expansion of an existing business or the establishment of a new business in the Camden County area.
ELIGIBILITY REQUIREMENTS
1. TYPE OF BUSINESS:
Eligible businesses include most for-profit businesses (proprietorships, partnerships, or corporations).
Refer to ineligible businesses section, page 2.
2. USE OF PROCEEDS:
- Land and building acquisition
- Leasehold improvements/building renovations
- Machinery and equipment
- Inventory
- Working Capital
3. REPAYMENT TERMS
- Maximum five (5) to Twenty (20) years, depending on project up to 5 years
- Inventory & Working Capital up to 10 years
- Leasehold Improvements, Machinery & Equipment up to 20 years
- Land and Building Acquisition, Building Renovations
4. LOCATION
Business must be located in Camden County
5. EQUITY INJECTION The borrower will be required to provide at least a minimum of ten percent (10%) on loans secured by real estate and improvements, and twenty percent (20%) on working capital and equipment loans. The cash injection may be substituted by equity in other assets, pledged to secure the debt, on a case-by-case basis. In no event shall 100% loans be made to a borrower, without adequate collateral.
6. MANAGEMENT The borrower must demonstrate that he or she has had management experience to manage the type of business they are expanding or starting. Management counseling in the areas of payroll tax form preparation, financial statement preparation, marketing, etc. will be available, should the borrower demonstrate the need for such counseling. Training will be available through the Small Business Development Center and will be an eligibility requirement for most of the loans funded through this program.
7. CREDIT HISTORY The borrower must have a satisfactory credit record, having established credit with a reputable firm and complying with the payments in a prompt manner, for at least 12 months. For those applicants not having a satisfactory credit history at the time of the application, any judgments or outstanding balances owed, must be satisfied and an acceptable payment record must be established to demonstrate the borrower's willingness to pay as agreed. Any applicants that have not satisfied past due obligations will be ineligible.
8. COLLATERAL
The bank will be secured by a first lien on the project assets. Personal guarantees will be required by the borrowers and additional personal collateral may be required to secure the guarantee, at the discretion of the bank. An appraisal may be waived for real property securing the debt, by using the most recent county tax assessor's value for ad valorem tax purposes. Unsecured loans are ineligible.
9. LOAN APPLICATION
The borrower must complete and submit the application form designed for this program, with attachments, to the participating bank.
INELIGIBLE BUSINESSES AND USES
1. INELIGIBLE USE OF PROCEEDS
- Relocating existing industry or business from one job market to another
- Refinancing
- Purchasing property for lease.
- Speculating
- Acquiring Ownership
2. INELIGIBLE BUSINESSES
- Non-profit businesses
- Passive income or developer/landlord institutions
- Lending and investment institutions
- Media (newspapers, magazines, etc.)
- Hospitals
- Farming and agricultural production
LOAN PROGRAM FEATURES
1. LOAN AMOUNT
- Minimum - $ 5,000
- Maximum - $50,000
2. INTEREST RATE
- Maximum combined interest rate of Prime + 2%, floating
3. OPERATION
The borrower must be the user of the loan proceeds, fixed assets, or working capital loan and be an operating-for-profit business. The borrower is not eligible if it plans to lease the project assets to a third party for their operation.
4. INSURANCE REQUIREMENTS
The assignment of life insurance will be required for the amount of the loan. This requirement can be waived, if insurance is unavailable. Hazard insurance for the value of the fixed assets will be required.
5. ENVIRONMENTAL AUDIT AND RISK ASSESSMENT
The bank may require an environmental audit. This depends on the real property involved securing the loan.
6. OTHER CONDITIONS
The borrower will be required to execute a loan agreement that will require the borrower to accept, on a periodic basis, practical assistance with management, preparation of financial statements, and other matters involved in operating the business, from the Small Business Development Center, or a person designated by the bank.
UTILIZING THE PROGRAM
1. PARTICIPATION
CADDA staff will respond quickly to loan requests (up to $25,0000) to prevent unnecessary delays and provide the bank and business with cash quickly, eliminating another approval layer, and additional paperwork. The funding and lien are shared equally with the Bank; CADDA funds one-half of the loan and assumes one-half (1/2) the risk.
2. APPROVAL PROCESS
The Bank evaluates the applicant and approves the loan request contingent on CADDA's approval.
3. DOCUMENTATION
If the applicant is eligible, the bank completes the “Camden County Enterprise Routing Form” and “Request for CADDA Loan Participation” form which list the loan terms, encloses the required documents, and sends the documents to CADDA. Upon receipt of both forms, CADDA evaluates the loan request and if approved, prepares and returns the following documents within two working days: a) Participation Agreements (executed by Bank and CADDA) b) Compliance of Federal Laws Agreement (executed by Borrower) c) Loan Agreement and/or Loan Modification Agreement (executed by Borrower) d) Conflict of Interest Form (executed by Borrower)
4. FUNDING PROCEDURE
CADDA returns a check in the amount of its loan participation (not to exceed $25,000) with the loan documents, unless the use of proceeds is for construction. If construction is required, CADDA will issue a written commitment to fund its share of the permanent financing after construction is complete.
5. LOAN FEES
CADDA charges no loan fees for this service.
6. LOAN CLOSING
The bank or its attorney closes the loan, using the bank's note and other related documents. Only three (3) CADDA documents must be signed by the borrower.
7. LOAN SERVICING
The bank is the lead lender and services the loan. CADDA is available on an as-needed basis and will provide assistance at the bank's request.
8. LIQUIDATION/LOAN LOSS
CADDA shares the net liquidation proceeds on a pro-rata basis with the bank and shares pro-rata in the event of a loss.
FOR MORE INFORMATION CONTACT:
Coastal Area District Development Authority (CADDA)
WEBSITE: www.cadda.com
501 Gloucester St., Ste. 201, Brunswick, GA 31520
PHONE: (912) 261-2500 FAX: (912) 261-0032
1 Bull Street, 3rd Floor, Savannah, GA 31401
PHONE: (912) 236-9566 FAX: (912) 236-9562 |