06-A PEDC (12/18/2002) - Laserfiche WebLink

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Regular PEDC Meeting Dec. 18, 2002 Page 4 Development Grant, they had to develop a Revolving Loan Fund strategy, which was approved by the City Council and the Rural Development Division of USDA. He furnished the board copies of this material in the handout, also including forms indicating employment to be created by a project and a form for the applicant to indicate sources of funds and uses of funds for a proposed project. Mr. Jones advised that he had a list of forms that normally would be requested over the process of an application. He said the Revolving Loan's guidelines occupy the first four pages of the handout. It basically says what the applicant is going to do and how the applicant is going to do it. Mr. Jones said the fifth page is a list of information required from the applicant. Mr. Jones said that loans usually do not exceed 50% of the total amount needed for the project. The bank would provide 40%, with the borrower having at least 10% involved. It is possible for the borrower to put up the other 50%, as long as they are not exceeding grant funds of 50%. Mr. Jones said that this is a direct loan meaning that the payments are due 30 days after closing. The interest rate is indexed to prime and bottoms out at the jumbo CD rate at the time of the loan. The term of the loan depends on what the collateral is, just like it would at a bank or the SBA. Mr. Jones advised that on two occasions they sent mail outs about money being available to the banks. These mail outs also explained the uses of the money and the amount of funds available. Mr. Jones advised that when they get calls from people who are interested, he gets paper work to them or lets them know what they need to do next. He said they fill out the application packet from an interview. Once that is done, they have to hold a public hearing, and two of those were held today. Mr. Jones said these applications then go before the City Council for approval. Then they go to the Regional Rural Development office in Mt. Pleasant, Texas, where they are reviewed and approved. They do an environmental check on each of the projects and send it to Temple, Texas, for approval. Mr. Jones said that after this money has been loaned, the returned principal and interest comes offUSDA books and all he has to do is let them know annually what he is doing. They do not go back for approval of the next loan.