Microenterprise Loan Program

 

The Economic Development Department provides financial assistance to start-up and expanding businesses through the Local Development Corporation of the Town of Union.The Town of Union Microenterprise Loan Program is one of several loan programs offered by the Local Development Corporation of the Town of Union.Assistance is also available to coordinate government and private sector resources and package business proposals.By networking with local brokers, economic development staff can also assist business contacts in identifying Town of Union sites.

The Microenterprise Program is an initiative in order to make funding available to start-up or existing businesses with five (5) or fewer employees (one of which must be the owner of the existing or proposed business) that may not be able to be approved for a loan through what might be considered a traditional means of financing (i.e. Commercial Bank, Credit Union, etc..) without the use of public funds.

Application Fee: $50.00 (non-refundable)

Application Period: Open

Interest Rate: 2.5%

The two and one half (2.5%) percent interest rate is fixed for three (3) years.

Amount of Financing:

Up to 75% of eligible projects, not to exceed $20,000.Minimum loan is $2,500.

Commitment Fee:

One percent (1%) of the approved loan amount

Borrower:

Any legal borrowing entity.No borrower that has defaulted on a previous Local Development Corporation loan or any other direct or indirect federally funded or guaranteed loan program will be eligible to apply.

Eligible Areas:

Town of Union, including the Villages of Endicott and Johnson City.

Eligible Use of Proceeds:

Acquisition of land and buildings; *New Construction; *Expansion; *Renovations; *Leasehold improvements; Acquisition of existing businesses; Furniture and Fixtures; Machinery and Equipment; Trucks; Automobiles; Inventory; Working capital, Fees for professional services, such as appraisals, surveying, accounting, engineering and architectural.

* subject to Federal Labor Standards Provisions (see below)

Ineligible Use of Proceeds:

Accounts Receivable; Wages; Speculative product development; Refinancing; Incorporation fees; Loan packaging fees; Application fees, Late fees and fines.

Ineligible Users:

Lending institutions; Recreation facilities not open to the public; Investment real estate; Gambling facilities; Bars; Tavern; New, used and rental cars sales/leasing businesses; Laundromats, Beauty and barber shops and similar personal services; Nursing homes; Family day care homes, or Day care centers, if not licensed by the state; Businesses operated from the home.

Amount of Participation:

At least 25% of the project cost is funded privately, either through a private lender, another public lender and owner equity (a minimum of 10% owners cash equity is required).

Term of the loan:

Based on the life of the asset and the approved amount of the loan not to exceed a term of three (3) years.If leasing, the term of the loan can not exceed the length of the lease.

Collateral:

First mortgage or subordinate mortgage to a bank on all property and buildings taken as collateral; Tangible personal property; Furniture and Fixtures; Machinery and Equipment; Marketable securities.An appraisal may be required on any tangible personal property and/or buildings taken as collateral. Appraisal values must be greater than the loan financing, and can not exceed the allowable program loan-to-value ratio.

Guarantees:

Personal guarantees from company owners and spouses if involved in the operation of the business.Corporate guarantees.

Federal Labor Standards Provision:

This loan program is subject to the Federal Labor Standards Provisions and the Davis-Bacon prevailing wage requirements (as determined by the U.S. Department of Labor) where construction and/or renovation applies.

Other Criteria:

  • Demonstrated need for financing
  • Demonstrated ability to repay debt
  • Demonstrated Commitment by the Owner (s)
  • Firm project and project cost

Job Creation and Retention:

Funding is based on the number of jobs to be created within two (2) years of the loan approval (not including the owner(s)).The majority (51%) of the jobs to be created or retained must be filled by people from low and moderate-income households, or available to people from low and moderate-income households.

United States Department Of Housing And Urban Development Income
Guidelines, Effective 5-14-10

Family Size

1

2

3

4

5

6

7

8+

Low Income

$33,850

$38,650

$43,500

$48,300

$52,200

$56,050

$59,900

$63,800

Job Cost Ratio:

1 full-time job equivalent: $20,000

Business Start-ups

Start-up businesses may apply for funding under the Town of Union Microenterprise Loan Program.Start-up businesses will have additional requirements for loan approval as follows:

  • The Entrepreneur must incur risk i.e., the entrepreneur must be investing a minimum of 10% personal capital into his/her enterprise.Minimum equity is 10%.
  • The Entrepreneur must demonstrate adequate management capability including the ability to manage both human and financial resources.
The Entrepreneur must demonstrate intimate knowledge of the industry in which he/she will operate a business.Such knowledge must include knowledge of billing practices, competition, legal issues, marketing and advertising, etc.Start-up businesses may obtain assistance with their business plan and other issues through the Small Business Development Center (SBDC) or similar private and public agencies.