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REVOLVING LOAN FUND
BASIC OVERVIEW AND OBJECTIVES
A
Revolving Loan Fund is a pool of money granted by federal and state
entities for the purpose of making loans to create and/or save jobs.
Borrowers repay loans and the money is returned to the RLF to make
other loans. In that manner, the RLF becomes an ongoing or “revolving”
financial tool.
The TCC Revolving Loan Fund serves as a source for gap financing
for small businesses seeking to locate or expand in Maryland’s
Garrett, Allegany, and Washington counties. Established in 1980,
the program has facilitated the creation and expansion of businesses
that have created or saved jobs in the Appalachian region. The program
operates by participating with banks and other lenders to assist
in financing a business project.
The major difference between the Tri-County Council RLF and conventional
lending is the lending goal. For the TCC RLF, the goal is creating
and saving private-sector jobs. RLFs are not intended to match the
capacity of banks or other lending organizations. The TCC RLF is
designed to fill gaps in existing local financial markets and to
provide or attract capital which otherwise would not be available
for economic development.
REVOLVING LOAN FUND
FREQUENTLY ASKED QUESTIONS
What kind of businesses are eligible for
the RLF loans?
If you are a for-profit corporation, partnership, or sole proprietorship
located in Garrett, Allegany, or Washington County in western Maryland,
you are eligible to apply for RLF financing.
Will the TCCWMD RLF be able to finance
my total project?
Sorry, no, the RLF program is restricted to “gap financing”—that
is, a private (bank) or other lender must also be involved in the
project for at least 50% of the total project cost.
What are eligible uses for the RLF loan?
RLF loans may be used for land and building costs, purchase of machinery
and equipment, and working capital. This applies to existing businesses,
as well as start-ups.
What may RLF funds not be used for?
We are unable to extend loans for:
- Refinancing
existing debt
- Real
estate for speculation
- Projects
that do not create or retain permanent jobs
- Projects
that otherwise qualify for financing through traditional lenders
or other programs
What
are the job creation/retention requirements?
The project to be financed must create or retain a minimum of one
job for each $15,000 of RLF funds requested.
Are there fees involved?
We require an application fee of $250(non-refundable) for loan processing,
and approved borrowers are assessed a one and one-half percent (1.5%)
loan origination fee at closing.
What is the maximum loan amount?
Our loans range from a minimum of $10,000 to a maximum of $400,000.
What kind of terms/interest rates are offered?
Maximum loan terms are 5 years for working capital, and up to 15
years for fixed assets.
Our interest rates are tied to the prime interest rate and are currently
prime plus
1 percent, with a floor of five percent.
What kind of collateral is required?
Tri-County Council generally requires:
- Deeds
of Trust
- Machinery,
equipment, and fixture liens
- Personal
guarantees
- Insurance
– key man life and hazard insurance
How
do I qualify for a TCCWMD RLF loan?
1. First, develop a business plan and detail your financing needs.
Contact Tri-County Council, your local Small Business Development
Center, or economic development department for assistance.
2. Apply for private (bank) financing. Determine how much the lender
will loan, and the conditions for the loan. (Remember, private financing
must account for at least 50% of your total financing needs to qualify
for RLF financing.)
3. Contact Mark Malec (301)-687-1080 at Small Business Development
Center to discuss your business plan and private financing commitment.
4. Complete the TCC RLF application form, and submit it with the
required information and your application fee. Your application
will be presented to the Loan Review Committee at its next scheduled
meeting.
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