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JACK COFER REVOLVING LOAN FUND |
| INTRODUCTION
In June 1976, the United States Department of Commerce, through its Economic Development Administration (EDA), provided a $5 million grant, which resulted in the establishment of the Coastal Area District Development Authority, Inc. (CADDA). The grant was used to make a loan to retain 850 jobs in Coastal Georgia. The loan repayments created a Revolving Loan Fund to provide economic assistance to other businesses within a nine-county region of Coastal Georgia including Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long and McIntosh.
PURPOSE The purpose of the RLF is to provide credit enhancement to participating banks to facilitate the financing of business and industry in the nine-county region served by the Coastal Area District Development Authority (CADDA) resulting in a positive economic impact through the creation and retention of jobs.
ELIGIBILITY ELIGIBLE UseS of Loan Proceeds -Land and improvements -Renovation of existing structure -Machinery and equipment -Leasehold improvements -Working capital
INELIGIBLE USE OF LOAN PROCEEDS -Business relocation -Speculating -Refinancing -Acquiring Ownership -Purchasing property for lease
Loan-TO-VALUE Real estate and improvements - up to 90% of cost or market value, whichever is less. Machinery and equipment - up to 80% of cost or market value, whichever is less. Working Capital - margins to be determined on a case-by-case basis.
Type of Business Eligible businesses include most for-profit businesses. The industrial development authorities of the CADDA's service area may also borrow RLF funds if the funds are used to acquire fixed assets for an industry committed to locate in the region.
INELIGIBLE BUSINESSES INCLUDE -Non-profit businesses -Media (newspapers, magazines, etc.) -Passive income or developer/landlord institutions -Hospitals -Lending and investment institutions -Farming and agricultural production
Job Creation One permanent job should be created or retained per $20,000 of CADDA funds loaned. If fewer jobs are created/retained, the project must demonstrate a high positive economic impact acceptable to CADDA.
CREDIT ENHANCEMENT The participating bank must need and request in writing CADDA’s financial assistance from the RLF program for all RLF loans except incentive loans for the purpose of locating a business in Coastal Georgia.
INDUSTRIAL RECRUITMENT RLF loans can be made to companies that are financially sound and do not require credit enhancement provided the company assisted certifies that the RLF loan was a factor in selecting Coastal Georgia as its location.
REGULAR LOAN PROGRAM PROCEDURE Approval Regular loan applications are prepared by CADDA staff and recommended to the CADDA Board of Directors (BOD) for approval. Special loan programs listed under the “Other Program” section have prior BOD approval for immediate funding.
Closing After the loan has been approved by the CADDA Board of Directors for RLF financing, a meeting will be scheduled to review and sign the RLF documents and set a date for funding CADDA’s portion of the loan.
If the project requires construction or an interim loan, the participating bank will fund the interim loan internally. CADDA only participates in the permanent loan after construction has been completed.
Servicing Loan servicing on loans sharing a first lien is generally done by the private lender. CADDA will assist in loan servicing at the request of the private lender.
LOAN PROGRAM FEATURES
BENEFITS · Improved Loan Quality - CADDA's participation reduces the lender's credit risk. · Reasonable Interest Rates and No Loan Fees- CADDA establishes the interest rate at a rate equal to or less than the bank’s interest rate. CADDA charges no loan fees for its participation. · Longer Terms – CADDA’s participation may encourage longer repayment terms, which reduce the borrower's debt service and improves operating cash flow. · New Customers - The RLF creates and/or retains jobs, which translates into additional customers for the private lender and new jobs for the community. · Low Down Payment – CADDA’s participation may reduce the down payment, increasing working capital for the customer. · Quick Response - The loan can be closed and funded shortly after CADDA BOD approval. · No Prepayment Penalty - The borrower will pay no penalty for prepaying the loan on the CADDA portion. · No Loan Fees – There are no loan fees for most participation loans. · Loan Servicing Assistance – CADDA’s staff also assists the bank in servicing the loan.
LOAN DOCUMENTS For loans secured by a shared first lien, CADDA uses the bank’s documents, requiring minimal documents from CADDA, including a participation agreement with the bank. The borrower is required to certify to the adherence of all federal laws, that there is no conflict of interest and that the business is not relocating. Interest Rate CADDA’s portion of the loan is generally determined by the CADDA BOD at an interest rate equal to or less than the bank’s interest rate, fixed or floating, depending on the type of participation. The bank establishes the rate of interest on its portion of the loan, not to exceed “Wall Street Journal” Prime interest rate plus three (3) percent.
Repayment Schedule For loans secured by a shared lien, CADDA’s repayment terms are the same as the bank’s. On all other loans, the loan repayment is based on the useful life of the asset pledged to secure the loan, the use of the proceeds, and the cash flow available to service the debt.
LOAN PROGRAM REQUIREMENTS · Cash Flow -The business' adjusted or projected cash flow must be adequate to service the entire debt. · Credit History -The business and its principal(s) must have satisfactory history of meeting debt obligations in a timely manner. · Management -The company must have experienced management to successfully operate. · Source of Funds – The funds needed to finance the project are provided by the Private Lender (bank), CADDA and the Borrower (SBC). · Location -The project must be located within the nine Coastal Georgia counties of Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long and McIntosh. · Collateral and Participation Position -CADDA generally shares the collateral on a shared pro-rata basis with the private lender. CADDA will consider a subordinated lien if no other lender is available. Unsecured loans are ineligible. · Insurance
Hazard insurance must equal the value of the assets pledged. If collateral pledged is located in a “Special Hazard Area” subject to flood, mudslides, erosions or earthquakes, as determined by a qualified specialist, the proper insurance coverage will be required. Life insurance policies and assignments are required on principal(s) equal to CADDA's portions of a subordinated loan and may be required on a shared lien loan. In all cases, where management is key to the business’ survival, the life insurance will be required.
· FEES -Legal fees and closing costs are the responsibility of the borrower.
OTHER PROGRAMS The RLF loan program has other targeted loan programs to serve local community needs. Eligibility requirements can be obtained upon request. These loan programs are pre-approved by the Coastal Area District Development Authority Board of Directors.
-Brunswick Mainstreet Loan Pool -Hinesville Mainstreet Loan Pool -Kingsland Downtown Loan Pool -Springfield Downtown Loan Pool -Darien Downtown Loan Pool -Statesboro Downtown Loan Pool -Camden County Enterprise Program -St. Marys Downtown Loan Pool -Ed Pinckney Enter-Prize Loan Program -Woodbine Downtown Loan Pool -CADDA Express Loan Program -RLF Policy for Fixed Asset Financing
The “RLF Policy for Financing Fixed Assets” is designed to offer financing to acquire fixed assets and improvements. Applications require the normal approval process unless the total loan amount is less than $100,000 and is a shared first lien. FOR MORE INFORMATION CONTACT: WEBSITE: www.cadda.com 501 Gloucester St., Ste. 201, Brunswick, GA 31520 |