Subpart 1.
Regional policies required.
Regional policies must be
developed to ensure that business loan applications meet specified eligibility
threshold requirements. The criteria in this part must be incorporated into the
regional policies.
Subp. 2.
Financing gap.
Loans must be made to businesses that are not
likely to undertake a project for which loans are sought without assistance
from the challenge grant program. The loan applicant must demonstrate the
existence of a financing gap by documenting which of the following apply to the
business:
A. inadequate
equity;
B. inadequate private
lender financing; or
C. inability
to pay market interest rate or term requirements.
Subp. 3.
Jobs which principally benefit
low-income persons.
A loan must be used for a project designed
principally to benefit low-income persons through the creation or retention of
jobs (principally is defined as more than 50 percent of the persons
benefiting).
In addressing this criterion, an applicant should be prepared
to show how low-income persons directly benefit from the creation or retention
of jobs by providing evidence that the jobs retained employ low-income persons
and that jobs created are filled or made available to low-income persons. The
following are minimum threshold requirements relating to low-income job
creation/retention.
A. Among loan
applicants, priority must be given on the basis of the number of permanent jobs
created or retained by the project and the proportion of nonstate money
leveraged by the revolving loan.
B.
Only jobs directly resulting from a specific grant activity will be
considered.
C. In order to count
retained jobs, there must be clear documentation provided by the business that
it would reduce operations in the community or discontinue operations in
Minnesota if additional financing is not made available.
Subp. 4.
Leverage private
investment.
The amount of money made available from the regional
revolving loan fund may not exceed 50 percent of the total cost of the project.
The following are minimum threshold requirements for leveraging private
investment:
A. Except with prior
approval by the commissioner, leveraged private investment by the business must
be in the form of new commitments that have not yet been expended.
B. Financial commitments should not be
contingent upon events other than the approval of the regional revolving
loan.
C. With the approval of the
commissioner, a loan may be used to provide up to 50 percent of the private
investment required to qualify for a grant from the economic recovery
fund.
D. For business loans, the
amount of money appropriated from the rural rehabilitation revolving fund may
not exceed 50 percent of each loan made by the regional organization. The
amount of nonpublic money must be at least 50 percent of each loan made by the
regional organization. The loan limits of the regional organization will be
$5,000 minimum and $100,000 maximum.
E. For loans to local governmental units, the
amount of money appropriated from the rural rehabilitation revolving fund for
each regional revolving loan may not exceed $25,000. The maximum regional
revolving loan is $50,000. The local governmental unit must match the loan at a
minimum dollar for dollar from its revolving loan fund. The loan made by a
local governmental unit may be 100 percent public funds.
F. In determining which business activities
may be considered for loans, the following minimum requirements apply:
(1) A loan may not exceed 50 percent of the
total cost of an individual project.
(2) Eligible business enterprises include
technologically innovative industries, value added manufacturing,
agriprocessing, information industries, and agricultural marketing.
(3) A loan may not be used for a retail
development project.
(4) A business
applying for a loan must be sponsored by a resolution of the local governmental
unit within whose jurisdiction the project is located.
(5) Loan applications given preliminary
approval by the regional organization must be forwarded to the commissioner for
final approval.
Subp.
5.
Loan repayment.
For loans made to businesses,
amounts equal to one-half of each principal and interest repayment must be
deposited in the rural rehabilitation revolving fund. The money deposited in
the fund will be used for additional challenge grants to the funding region for
which the money was originally designated. The remaining amount of the loan
repayment may be deposited in the regional revolving loan fund for further
distribution by the regional organization.
For loans made to local governmental units, one-half of the
money loaned by the regional organization must be repaid to the rural
rehabilitation revolving fund. With the agreement of the regional organization,
50 percent of the money may be retained by the local governmental unit's
revolving loan fund for further distribution by the local governmental
unit.
