|
FINANCIAL RESOURCES
RPC staff provides its member governments with assistance in the various stages of project implementation. The RPC offers assistance in identifying potential funding sources, the application process, and the management of project funds.
Some of the most commonly used funding sources are:
The Regional Planning Commission of Greater Birmingham operates a revolving loan fund that provides supplemental financing for expanding and new businesses located in the six-county region whose projects will result in the creation of new, permanent jobs. RLF funds may be used in conjunction with SBA 504 and 7(a) guarantees, commercial loans, mortgage loans and other public sector revolving loans. RPC loans offer flexible terms, fixed interest rates, and up to 90% financing.
Eligible uses include the purchase and development of land and buildings, the renovation or modification of existing buildings, purchase of machinery and equipment and the provision of permanent working capital. The following repayment terms are considered appropriate for most RLF projects:
- Building and Real Estate: 5 year term with up to 20 year amortization
- Machinery and Equipment: 5-8 years or useful life
- Working Capital: 1-5 years
RLF loan grantees are required to create one new job for every $35,000 of RLF assistance. Loans are to be secured by lien positions on collateral.
RLF Fees:
- $350 application fee
- 1.5% One-time processing fee
- Borrower pays all normal closing costs
The RLF was not established to compete with the private lending community or to be a lender of last resort. Rather, the RLF has been established as an economic development finance resource for filling capital "gaps" between what other lenders can reasonably lend on a project and what the business can provide in equity. The advantage to other lenders includes reduced risk due to the participation of the RLF and increase funds available for other loans. Also by utilizing RLF funds, banks can offer attractive financing packages that lower debt service. The RPC has developed it's own loan application and also provides all needed loan administration services.
The RLF is a local economic development finance initiative. All loan decisions are made by the RPC's Loan Review Committee which is made up of representatives from the region. This local approval process translates into a faster response to loan requests and a minimization "red tape" for prospective borrowers.
Interest rates on RLF loans are generally near the prime rate. The max is prime +4.75. By combining RLF and other financing, the borrower can realize an attractive rate. Rates for specific projects will be determined on an individual basis and are derived from an analysis of historical financial data of the business and a three-year projection (pro-forma) of the business so that the return on investment/equity will be in line with industry standards. Additional information considered for interest rate determination will be conditions which result in substantial economic benefits, including job creation and industrial diversification and other economic development considerations which will enhance the success of the project.
- A brief history of your business
- A brief description of the proposed project and its expected benefits to the company
- A detailed breakdown of project costs
- Three years of financials: tax returns, company financial statements
- Current Balance Sheet and Profit & Loss Statement
- Personal financial statements on the project principals
- Resumes on all project principals
- A two-year project projected financial statement for the business given the completion of the proposed project
- If the business is a start-up or less than five years old, a business plan will need to be provided
- Loans generally range from $50,000 to $300,000
- Business must be located within Blount, Chilton, Jefferson, St. Clair, Shelby, or Walker counties
- Loans must result in the creation or retention of permanent jobs
- At least 10% owner equity is required
- Businesses and their principals must be credit-worthy
- Principals and businesses must generate sufficient cash flow to repay the debt
- RLF assistance may not be used to finance passive investment projects
For more information please contact Yvonne Murray, 205.251.8139
|
