Business Loan Programs

USDA Rural Development Intermediary Relending Program (IRP)
(Available Throughout Jackson County)

 

Eligible Borrowers: Private profit and not-for-profit businesses; public bodies for community development projects.

Eligible Uses: Acquisition, construction, conversion, enlargement, or repair of a business or business facility

Purchase or development of land (easements, rights of way, buildings, facilities, leases, materials)

Purchase of equipment, leasehold improvements, machinery, and supplies
 Start up costs and working capital

Interest Rate: 5% Fixed

Term: Real Estate – 15 years
         Machinery and equipment – 10 years or useful life
         Used Machinery and equipment or rolling stock – 5 years
         Working capital and inventory – 5 years

Loan Amounts: Maximum $150,000 with a maximum of 75% of project cost

Employment Requirements: Loan recipients will be required to demonstrate the ability to create or retain one FTE employee per $15,000 of loan finds within the first two years of the loan.

Collateral: Includes machinery and equipment, personal guarantees, corporate guarantees, real estate and all other traditional sources of collateral. All loans will be fully secured. Subordination to commercial loans will be executed as appropriate.

Fees: Each borrower will pay closing costs equal to 1% of the loan or actual closing costs if more that the 1%.
 

USDA Rural Development Microentrepreneur Assistance Program (RMAP)
(Available Throughout Jackson County)

Service Area: Eleven southern Illinois counties including Jackson

Eligible Borrowers: A sole proprietor or business with not more than 10 full-time equivalent employees, including agriculture producers, and cannot obtain credit elsewhere.

Eligible Uses: Working capital; purchase of furniture, fixtures, supplies, inventory, or equipment; debt refinancing; business acquisitions; and the purchase or lease of real estate that is already improved and will be used for the location of business

Ineligible Uses: Construction costs

Interest Rate: 5% Fixed

Term: Maximum repayment period is 10 years

Loan Amounts: Maximum $50,000 with a maximum of 75% of project cost

Employment Requirements: Loan recipients will be required to demonstrate the ability to create or retain one FTE employee per $15,000 of loan finds within the first two years of the loan.

Collateral: Includes machinery and equipment, personal guarantees, corporate guarantees, real estate and all other traditional sources of collateral. All loans will be fully secured. Subordination to commercial loans will be executed as appropriate.

Fees: Each borrower will pay closing costs equal to 1% of the loan or actual closing costs if more that the 1%.

 

Community Development Assistance Program (CDAP)
(Available Only Within the City of Carbondale)

 

Uses of Loan Funds: Loans may be made to for-profit or not-for-profit businesses for fixed assets including land, buildings, machinery and equipment (including new construction or renovation of facilities) and to provide working capital. RLF loans cannot be used to refinance existing debts, finance the relocation of a business from one part of the State to another, or to finance speculative activities. The business and the facilities financed must be located within the
city limits of the City of Carbondale.

Private or Other Public Financing Also Required: Financing from individuals, financial institutions and/or other public sources must account for at least one-half of the project's funding. Investments made into the business prior to the approval of the RLF loan are not counted toward the private or other public financing requirement. Maximum Loan Amount: There is a state requirement that at least one full time equivalent job must be created or retained for each $15,000 of RLF funds invested in a project.

Interest Rate: The RLF loan interest rate will be no lower than necessary to facilitate the business project. Loans will be made for no less that a 3% interest rate.

Loan Security: All RLF loans must be secured with a mortgage, security agreement, promissory note, financing statement or other assignment of rights of the assets of the assisted business. The City of Carbondale may require personal guarantees of the owners of the business.

Justification for RLF Assistance: Under federal regulations a RLF loan can only be made if one of the following circumstances exists and has been verified: 1) The loan applicant can raise only a portion of the necessary funding from private or other public sources. 2) The business is considering multi-state location options and RLF funds are needed to equalize cost variation between states. 3) Full financing is available from private or other public sources, but the rate of
return is insufficient to induce the development to proceed.

Job Creation: The purpose of the loan program is to create jobs for low and moderate income persons. As noted above, at least one full time equivalent job must be created for each $15,000 of RLF funds invested in a project. At least 51% of all jobs created or retained as a result of a RLF loan must go to low or moderate income persons. The loan application contains an attachment which lists the income figures to qualify as low or moderate income. The results of job creation/retention must be documented by the completion of forms provided by the City, and the results must be reported quarterly to the City once the loan is approved.

Other State/Federal Requirements: Several laws must be complied with by businesses receiving RLF loans. Among them are the following:

Fair Labor Standards/Davis-Bacon Act. This law requires construction workers building or remodeling facilities financed with RLF funds to be paid the "prevailing wage" if the construction cost exceeds $2,500. This is generally union scale. Cost estimates prepared for RLF projects should be calculated using prevailing wages, if RLF funds are going to be involved in the construction. It may be possible to structure a project so that RLF funds are not involved in the actual construction work (such as purchasing equipment or inventory or providing operating capital) and thus avoid triggering Davis-Bacon. These situations are decided on a case by case basis in consultation with the State. 

Civil Rights Laws and Equal Employment Opportunity. All Federal and State Civil Rights and Equal Employment Opportunity laws must be followed. Discrimination will not be permitted. 

"Section 3". To the greatest extent feasible, opportunities for training and employment and contracts must be given to lower income residents of the project area.

Environmental Protection: As noted above, an environmental review is required for RLF projects. City staff will prepare the necessary forms; however, the applicant must cooperate by providing requested information and, if necessary, paying for needed technical studies. Projects in existing buildings that are not historic in nature, which do not involve water or air or other pollution, which have no significant impact on wetlands or floodplains or threatened and endangered species, and which do not significantly alter traffic patterns require a brief environmental review. Projects that do not meet the above criteria may require extensive, time consuming environmental reviews.