05-11-2004 Council Agenda - Laserfiche WebLink

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4. NATURE OF LOANS The Business Revolving Loan Fund may provide up to $25,000 per loan, provided that the loan recipient meets eligibility requirements and the fund amount is matched or exceeded by a participating lender. Interest on the portion of the loan borrowed from the fund shall be at an annual rate of two percent (2 %) and on the fixed or variable rate loan portion borrowed from the participating lender (to be at least 50% of total loaned to applicant) shall not exceed the participating bank's prime rate plus two percent per annum. Other loan terms shall be determined by the participating lender, except that no repayment period shall exceed ten years and any loans made by the participating lender and the BRLF must be co- terminus. If the loan recipient's business is sold or liquidated, the balance of the loan would become due and payable. 5. ORIGINATION FEE The applicant is required to pay an Origination Fee at the time of closing in the amount of $150 for the use of the 2% loan funds. It shall be the responsibility of the Participating bank to collect this fee at closing and remit it to the EDA. 6. PARTICIPATING LENDERS Participating lenders shall pre- screen loan applications under this Plan to determine whether applications meet the Plan's eligibility requirements, and shall additionally apply their ordinary standards for commercial /industrial improvement loans to such applications. Participating lenders then shall provisionally approve or reject the application, provided that no application can be rejected for any unlawful reason. If an application is provisionally approved, it shall be forwarded to the EDA for further consideration of the BRLF portion of the loan. Participating lenders shall close the loans, obtaining properly executed security agreements, mortgages, promissory notes, and corporate borrowing authorization, as appropriate from loan recipients. At the closing, each loan recipient shall certify that such applicant has read, understands, and will comply with the requirements of this Plan. The participating lender shall provide to the loan recipient such disclosures as may be required by law. Monthly, the participating lender shall remit to the EDA Secretary at 515 E. Little Canada Road, Little Canada, Minnesota 55117 that portion of any loan recipient's monthly payment, which represents repayment of the BRLF portion of the principal and interest on the loan. The EDA shall not be a party to any of the loan documents, but participating lenders, in agreeing to the terms of the Plan, agree to act as the EDA's agent in receiving the EDA's portion of the principal and interest payments on any loan given and further agree to transmit that portion to the EDA, within at least 15 days of receipt. Participating lenders shall provide copies of all loan documents to the EDA along with a participation agreement showing the extent of BRLF participation in the loan. Loan documents shall reflect the entire amount of debt incurred, including the portion owed to the EDA, and in any foreclosure or other collection remedy employed by any participating lender, such lender shall use its best efforts to collect that portion of the debt owed to the EDA as well as that portion owed to the lender. Participating lenders shall have the sole responsibility of determining applicants' credit risk and tiling any liens on collateral. - 5 -