The Ed Pickney Enter-Prize Loan Program

PURPOSE

The purpose of the program is to provide financing to economically disadvantaged business owners or potential business owners.  The loan proceeds are to be used for the expansion of an existing business or the establishment of a new business in the Glynn County area.

ELIGIBILITY REQUIREMENTS

1.         TYPE OF BUSINESS:

Eligible businesses include most for-profit businesses (proprietorships, partnerships, or corporations).  Refer to ineligible businesses section, page 2.

2.         USE OF PROCEEDS:

– Land and building acquisition

– Leasehold improvements/building renovations

– Machinery and equipment

– Inventory

– Working Capital 

3.         REPAYMENT TERMS

– Maximum five (5) to Twenty (20) years, depending on project

up to 5 years   – Inventory & Working Capital

up to 10 years – Leasehold Improvements, Machinery & Equipment

up to 20 years – Land and Building Acquisition, Building Renovations

4.         LOCATION

Business must be located in Glynn County.  If the business is located in the City of Brunswick, additional funds may be available for loan participation from the City of Brunswick.

5.         EQUITY INJECTION

The borrower will be required to provide at least a minimum of ten percent (10%) on loans secured by real estate and improvements, and twenty percent (20%) on working capital and equipment loans.  The  cash injection may be substituted by equity in other assets, pledged to secure the debt, on a case-by-case basis.  In no event shall 100% loans be made to a borrower, without adequate collateral.

6.         MANAGEMENT

The borrower must demonstrate that he or she has had management experience to manage the type of business they are expanding or starting.  Management counseling in the areas of payroll tax form preparation, financial statement preparation, marketing, etc. will be available, should the borrower demonstrate the need for such counseling.  Training will be available through the Small Business Development Center (SBDC) and will be an eligibility requirement for all start-up businesses receiving loans through this program.

7.         CREDIT HISTORY

The borrower must have a satisfactory credit record, having established credit with a reputable firm and complying with the payments in a prompt manner, for at least 12 months.  For those applicants not having a satisfactory credit history at the time of the application, any judgments or outstanding balances owed, must be satisfied and an acceptable payment record must be established to demonstrate the borrower’s willingness to pay as agreed.  Any applicants that have not satisfied past due obligations will be ineligible.

8.         COLLATERAL

The bank will be secured by a first lien on the project assets.  Personal guarantees will be required by the borrowers and additional personal collateral may be required to secure the guarantee, at the discretion of the bank.  An appraisal may be waived for real property securing the debt, by using the most recent county tax assessor’s value for ad valorem tax purposes.  Unsecured loans are ineligible.

9.         LOAN APPLICATION

The borrower must complete and submit the application form designed for this program, with attachments, to the participating bank.

INELIGIBLE BUSINESSES AND USES

1.         INELIGIBLE USE OF PROCEEDS

– Relocating existing industry or business from one job market to another

– Refinancing

– Purchasing property for lease.

– Speculating

– Acquiring Ownership without economic benefit

2.         INELIGIBLE BUSINESSES

– Non-profit businesses

– Passive income or developer/landlord institutions

– Lending and investment institutions

– Media (newspapers, magazines, etc.)

– Hospitals

– Farming and agricultural production 

LOAN PROGRAM FEATURES

 

1.         LOAN AMOUNT

– Minimum –  $  5,000

– Maximum – $ 50,000    ($75,000 if City participates)

2.         INTEREST RATE

– Maximum combined interest rate of Prime + 2%, floating

– City of Brunswick’s interest rate, when participation is included, will be 3%.

3.         OPERATION

The borrower must be the user of the loan proceeds, fixed assets, or working capital loan and be an operating-for-profit business.  The borrower is not eligible if it plans to lease the project assets to a third party for their operation.

4.         INSURANCE REQUIREMENTS

The assignment of life insurance will be required for the amount of the loan.  This requirement can be waived if insurance is unavailable.  Hazard insurance for the value of the fixed assets will be required.

5.         ENVIRONMENTAL AUDIT AND RISK ASSESSMENT

The bank may require an environmental audit.  This depends on the real property involved securing the loan.

6.         OTHER CONDITIONS

The borrower will be required to execute a loan agreement that will require the borrower to accept, on a periodic basis, practical assistance with management, preparation of financial statements, and other matters involved in operating the business, from the Small Business Development Center, or a person designated by the bank.

UTILIZING THE PROGRAM

1.         PARTICIPATION

CADDA & City will respond quickly to loan requests (up to $25,000 each) to prevent unnecessary delays and provide the bank and business with cash quickly.  The funding and lien participation is shared pro rata with the Bank; CADDA and City (when applicable) will each fund its pro rata portion of the loan and assume the corresponding risk.

2.         APPROVAL PROCESS

The Bank evaluates the applicant, determines eligibility, and approves the loan request, contingent on CADDA/City approval.

3.         DOCUMENTATION

If the applicant is approved by the bank, the bank completes the “The Ed Pinckney Enter-Prize Routing Form” and “Request for CADDA Loan Participation” form and sends the required documents to CADDA.

Upon receipt of both forms, CADDA evaluates the loan request and if approved, prepares and returns the following documents within one working day:

a)         Participation Agreement (Bank and CADDA, and City of Brunswick, if applicable, executes)

b)         Compliance of Federal Laws Agreement (Borrower executes)

c)         Loan Agreement and/or Loan Modification Agreement

(Borrower executes)

d)         Conflict of Interest Form (Borrower executes)

4.         FUNDING PROCEDURE

CADDA returns a check in the amount of its loan participation (not to exceed $25,000) with the loan documents, unless the use of proceeds is for construction.  If construction is required, CADDA commits in writing to permanent financing after construction is complete.  City will remit its pro rata portion of funding to Bank.

5.         LOAN FEES

CADDA and City charge no loan fees for this service.

6.         LOAN CLOSING

The bank and/or its attorney closes the loan, using the bank’s note and other related documents.  Only three (3) CADDA documents must be signed by the borrower.

7.         LOAN SERVICING

The bank is the lead lender and services the loan.  CADDA and City are available on an as-needed basis and will provide assistance at the bank’s request.

8.         LIQUIDATION/LOAN LOSS

CADDA and City share the security on a pro-rata basis with the bank and share pro-rata in the event of a loss.