ELIGIBILITY REQUIREMENTS

1) Types of Projects Funded

The Revolving Loan Fund makes loans for the start-up, expansion or succession of businesses within the Pelican Rapids area. All projects must create new employment opportunities in the Pelican Rapids area or retain jobs which would clearly be lost without the revolving loan fund support. Loans which will result in relocation of a business within the area will generally not be made except to facilitate a substantial expansion. Loans to preserve a business will be made only where it can be clearly demonstrated that the business would be lost to the community without the loan, and that the company has viable ongoing business prospects.

Businesses applying for revolving loan fund support must demonstrate a “Financing Gap” which establishes that the project would be unlikely to successfully go forward in the Pelican Rapids area without that support. “Financing Gap” usually takes one of the following forms:

• The collateral available will not fully satisfy the underwriting standards of commercial lenders for a loan of the size needed for the project to go forward;
• There is insufficient equity available to qualify with a commercial lender for the proposed new lending;
• The business is at the maximum allowable lending limit for its commercial lender;
• The cash flow available to repay the debt is insufficient to repay a loan made at standard commercial terms; or
• The project is not economically competitive in the Pelican Rapids area location with standard commercial financing.

2) Business Sectors Served

Projects in the manufacturing, tourism, and agri-processing sectors will be given priority.  Service and retail businesses will be considered, but if unduly competitive with local firms serving the local market, they will be considered on a case-by-case basis. Loans will not be made for agricultural purposes (crop or livestock production, etc.).

3) Matching Requirements

The revolving loan fund will generally provide no more than 50% of the funding required for a project.  New investment in the project must be made by other sources, such as private lender financing, or equity investment, and must generally total at least 50% of the project.

4) Eligible Uses of Loan Funds

Loans may be made to projects for real estate, machinery, or equipment, working capital, inventory, and related expenses.  Loan funds may not be used for debt refinancing. Fees charged by individuals or firms for the preparation of application materials are not eligible uses of funds. Free assistance preparing loan application is available through the Small Business Development Center and can be arranged for by calling (218)236-2289.

5) Collateral Requirements

While the revolving loan fund will occasionally accept positions on collateral subordinate to private lenders, all loans must be fully collateralized.  The evaluation of the value of any collateral offered will be solely at the discretion of WCI.  Personal guarantees are generally required from all persons owning 20% or more of a business receiving financing through this program.