Revolving Loan Fund
Objectives
The primary objective of TCAD's RLF is to create quality employment opportunities and strengthen the tax base by helping entrepreneurs start new businesses or by helping existing businesses expand. Like with most TCAD programs, businesses that sell a product or service to customers outside of Tompkins County are the target of the program. Conversely, the program avoids delivering incentives to businesses that compete with other existing businesses in the County, e.g., retail and commercial businesses.
Application Review and Approval Process
TCAD staff meets with interested applicants and describes the goals of the program and the approval process. Businesses or entrepreneurs are encouraged to submit an application if funds are available and if the proposed business and project meet the guidelines of the program. Applicants are informed that eligible projects are reviewed on a first-come, first-serve basis. Businesses deemed ineligible are referred to other economic development programs when possible.
If an applicant needs assistance completing the application form, they are referred to AFCU's CEO program or the SBDC at SUNY Binghamton. TCAD staff does not provide comprehensive business planning assistance. TCAD does recommend that applicants seek the advice of a local attorney and accountant.
TCAD staff reviews applications for completeness and, if necessary, requests additional information from the applicant. If the application is complete, it is sent to the TCAD Revolving Loan Fund Committee. They usually have at least one week to review the application. The Committee is also given an opportunity to request additional information from the applicant.
A meeting is scheduled in order for the applicant to meet with the TCAD RLF Committee. During this meeting, the Committee discusses the application and has the opportunity to ask questions of the applicant. This session with the applicant is very helpful in resolving any questions the Committee may have about the business.
The Committee, after the applicant is excused from the meeting, will usually make a decision regarding the request. The decision will include all of the terms and conditions of the loan and outlines any additional information that may be required before the loan is closed. No action by the TCAD Board or Executive Committee is required.
Collateral
Like most government funded loan programs, TCAD's RLF accepts a weaker collateral position than would a conventional lender. While a shared first position with the participating conventional lender is preferred, the RLF will usually accept a second position behind the bank. In some cases, when another government program is involved in the financing, TCAD may take a third position or share its second position. This has been the case with projects financed in conjunction with the regional revolving loan fund managed by the Broome County Industrial Development Agency.
TCAD will, in almost all circumstances, require personal guarantees from the principals of the business applying for the loan. Security positions on equipment, inventory, and accounts receivable are also taken. A security position in real estate is not typical because of the additional legal costs involved.
Uses
The TCAD RLF can be used to finance real estate, FF&E and working capital. It cannot be used to refinance existing debt.
Structure
The typical structure of a loan would have a conventional lender providing a majority of the financing, the applicant contributing a minimum of 10% equity, and TCAD providing the remaining funds necessary. The TCAD RLF does not replace conventional financing. Its goal is to participate in situations where the necessary conventional financing and equity is not available or where the cost of the available funds is such that debt service cannot be covered by available cash flow.
TCAD's funds can be used in conjunction with other government programs.
Lending Area Tompkins County
Rates and Terms
The length of the loan is generally aligned with the useful life of what is being financed. Typically, working capitals loans are for two to three years, while loans on machinery and equipment are for three to seven years. Because the program desires to recycle funds as often as possible, real estate-related loans will usually have a shorter term than conventional financing. In the past, TCAD has developed amortization schedules based on a 20-year term, but this schedule required a 10-year balloon payment.
Fees
An application fee of $250 is due at closing. The applicant is also responsible for paying the TCAD attorney's fees which generally range from $300 - $800.
download the Revolving Loan Fund application
