The Regional Planning Commission of Greater Birmingham operates a revolving loan fund that provides supplemental financing for expanding and new businesses located in Blount, Chilton, Jefferson, St. Clair, Shelby and Walker Counties 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.
The advantages of using RLF funds are:
- Flexible terms
- Fixed interest rates
- Up to 90% financing
Eligible Uses and Repayment Terms
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
- Create one new job for every $35,000 of RLF assistance
- Loans are to be secured by lien positions on collateral
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 include reduced risk due to the participation of the RLF and increased funds available for other loans. Also by utilizing RLF funds, banks can offer attractive financing packages that lower debt service. The Regional Planning Commission has developed its own RLF Loan Application and also provides all needed loan administration services.
Loan Review Process
The RLF is a local economic development finance initiative. All loan decisions are made by the Regional Planning Commission's Loan Review Committee which is made up of representatives from the region. This local approval process translates to a faster response to loan requests and a minimum of "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 based on analysis of historical financial data of the business and three-year projections (pro-forma) of the business so that the business' 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.