Revolving Loan Fund
Funded in part by the Indiana Department of Commerce, Neighborhood Assistance Program; the U.S. Department of Commerce, Economic Development Administration; and the U.S. Department of Agriculture, Rural Development
Program Intent
The Crawford County Revolving Loan Fund (RLF) exists to help entrepreneurs start, expand, or retain businesses in Crawford County. RLF loan recipients are expected to increase the investment and disposable revenue in the county and further enhance possibilities for related industry and job opportunities. All RLF loan recipients are required to produce or retain at least one job for each $10,000 to $20,000 of RLF investment.
The Crawford County RLF usually provides only the “gap” financing needed to induce local financial institutions to complete a financing package. RLF clients must contribute at least 10% equity, and working capital loans are limited to 50% of the total project cost. RLF financing is in the form of a direct loan to an individual or business at variable rates. Terms can be flexible if proven necessary by the business plan. Blended interest rates and adjustable terms are designed to assist businesses to achieve success with projects that may not have been possible under conventional lending practices.
Eligibility
Eligible applicants for financial assistance from the RLF include businesses that are for-profit and owned by any person, partnership, cooperative, or corporation engaged in production, manufacturing, or providing services. Business operations must exist or be locating within the geographic boundaries of Crawford County, Indiana. All jobs created must pay at or above the county’s average wage.
Collateral & Security
The RLF can provide up to 90 percent of the total project cost. The principals or applicant must furnish at least 10% as equity. The actual equity required will depend on the type of loan and other information provided by the applicant. Each loan must be secured by appropriate collateral. This collateral may take the form of mortgages, liens, personal guarantees, or a combination of these. The RLF also requires proof of insurance on the collateral pledged. In the case of closely held corporations or sole proprietorships dependent on the continued success of certain individuals, the RLF may also require life insurance on key personnel.
Loan Types
The RLF has available three basic loan types. First, the RLF can offer fixed asset loans for the expansion of existing operations within the county. The second type can be working capital loans for businesses that need short-term assistance to complete an expansion program. The third is for venture capital. Venture capital loans can be made for a portion of the start-up cost for new businesses that are unable to obtain funding from conventional sources.
Borrower Responsibility
A business plan containing information about the management of the company including an analysis of the market, internal and external financing options, and financial projections must be part of the information provided by the applicant.
The specific purpose of the funds requested as well as how the funds will contribute to the success of the business should also be included. Reliable financial statements are crucial in the decision-making process for a lender or investor. An existing business will be required to supply at least three years of financial history. A new startup business must present a dynamic business plan and proof of the creditworthiness of the borrower.
The borrower will bear the cost of all accounting services, appraisals, surveys, and legal counsel associated with the preparation and filing of the application. The borrower will be charged a loan origination fee of $100 due at the time the application is made. An application processing fee of $250 will be due at the time of the loan closing along with a loan servicing fee equal to 1% of the RLF loan amount.
During the term of the loan, a borrower is prohibited from relocating the business outside the geographical boundaries of Crawford County. The loan agreement will give the Loan Review Committee the right to call the loan should the borrower move the business from Crawford County.
Loan recipients will have periodic reporting requirements to the loan administrator. Financial statements will be requested on a regular basis during the life of the loan to monitor the financial stability of the business.
Business Plan
A business plan is a company’s best marketing tool when seeking investors for a new enterprise or expansion of an existing business. Financial institutions, as well as the Revolving Loan Fund, want to be assured that a prospective loan recipient has carefully thought about the proposed business venture. RLF loan applicants are expected to present a well-prepared business plan and include enough data to sell the proposed project to potential investors.
A business plan should include the following:
A cover sheet with the name and address of the business as well as the principal’s name and telephone number.
An executive summary is a concise statement of the current status of the business and the expected benefits of the investment.
A broader description of the business with product or service description, marketing, and sales strategies, management and ownership makeup, and key staff members.
Financial data including the total funding requested, its proposed use, a list of the capital equipment and assets, and financial reports and projections.
Assistance may be available in plan preparation.
Need More Info?
The development of the Revolving Loan Fund is a continuation of the efforts of County Officials and the Economic Development Commission. For additional information, please contact the Crawford County Economic Development Commission.