HomeMy WebLinkAbout10. 20-150 APRIL 14, 2020 20-150 RESOLUTION
(CARRIED 7-0 LOST LAID OVER WITHDRAWN )
PURPOSE: APPROVE REVISIONS TO CAPITAL CATALYST FUND
MANUAL
INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT
WHEREAS the Greater Oshkosh Economic Development Corporation (Greater
Oshkosh) and the City of Oshkosh recognized the need for a targeted funding initiative
to assist startups and entrepreneurs in greater Oshkosh; and
WHEREAS the Capital Catalyst fund was developed with funds reallocated from
the Greater Oshkosh Revolving Loan Fund and funding from Wisconsin Economic
Development Corporation.
WHEREAS City staff has worked with the Long Range Finance Committee and
Greater Oshkosh to draft a program manual for administering said Capital Catalyst
Fund; and
WHEREAS Greater Oshkosh Economic Development staff and Long Range
Finance Committee have reviewed the attached revisions.
NOW THEREFORE BE IT RESOLVED that the Common Council of the City of
Oshkosh hereby approves the attached, revised Capital Catalyst Fund Manual to be
administered by Greater Oshkosh and the proper City officials are hereby authorized to
take those necessary steps to implement said program.
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Oshkosh
TO: Honorable Mayor and Members of the Common Council
FROM: Allen Davis, Community Development Director
DATE: April 7, 2020
RE: Approve Revisions To Capital Catalyst Fund Manual
BACKGROUND
The Wisconsin Economic Development Corporation (WEDC) has offered grant funds through
the Capital Catalyst Program to local Economic Development agencies to help entrepreneurs
and start-up companies in their service area. The Greater Oshkosh Economic Development
Corporation (GO-EDC) obtained funding for two grant applications and drafted the Capital
Catalyst Revolving Loan Fund manual for the administration of WEDC grant and the City's
matching funds. Since that time, the 2016 Capital Catalyst Manual is in need of some updates
related to the same issues as were identified in the Revolving Loan Fund Manual update.
ANALYSIS
The WEDC Capital Catalyst Revolving Loan Fund Manual has guided the investment decisions
for Capital Catalyst I and Capital Catalyst II. Each program used the maximum $250,000 to
begin the fund. The manual guides the GO-EDC RLF committee and staff in reviewing and
potentially awarding investments to worthy applicants. The important elements of the manual
are:
• The manual is based on WEDC requirements and the City's updated RLF manual.
• The $125,000 WEDC grant funds can be used in the form of grants, loans, equity
investments, or a combination.
• The $125,000 in City RLF funding will be in the form of loans.
The proposed program manual revisions are based on the City's experience with the RLF,
Capital Catalyst I and II, best practices of other funds around the state and nation, and
recommendations from the City's Auditor. A summary of the revisions is below:
• Defines the source and use of funds for GOEDC administration of the fund to be no
more than 15% of the interest paid on the loans, as documented by GOEDC.
• The City will receive a copy of the dosing documents for all loans.
City Hot.215 Church Avenue P.O.Box 1130 Oshkosh,WI 54903-1130 920.236.5000 hitpJ/www.ci.oshkosh.wi.us
• GOEDC will contract with a CPA for annual auditing and identifies the audit
procedures that the CPA will use.
• GOEDC may maintain up to an amount needed to preserve the WEDC matching funds
remaining in the fund, and any City funds above that amount shall be forwarded to the
City.
• Better defines the quarterly financial reporting requirements.
Since WEDC plans to offer another Capital Catalyst grant round in 2020, GOEDC's potential
Capital Catalyst III would follow this same manual.
FISCAL IMPACT
There is no fiscal impact of these revisions since the Capital Catalyst funds have no impact on
the levy.
RECOMMENDATION
The City Council approves Capital Catalyst Fund Manual.
Respectfully Submitted, Approved,
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Allen Davis Mark Rohloff
Director of Community Development City Manager
City Hall,215 Church Avenue P.O.Box 1130 Oshkosh,WI 54903-1130 920.236.5000 http://www.ci.oshkosh.wi.us
GREATER OSHKOSH
CAPITAL CATALYST FUND
PROGRAM MANUAL
Revised: July 7, 2016
Revised Dram April 14, 2020
R E A T E F7
OS H K jS H 00RP0R4TdON
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10o N. Main St.Suite 104,Oshkosh,WI 54901
Telephone: (920) 230-3321
www.Greater0shkosh.com
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TABLE OF CONTENTS
Page
FOREWORD 3
SECTION is GENERAL PROVISIONS
1.1 PURPOSE 4
1.2 OBJECTIVES 4
1.3 AMENDMENTS 4
SECTION 2: ADMINISTRATION
2.1 LOAN REVIEW COMMITTEE 5
2.2 MEETINGS 5
2.3 RECORDS 5
2.4 LOAN FEES 6
2.5 FUND DEVELOPMENT/INVESTMENTS 6
SECTION 3: ELIGIBILITY CONSIDERATIONS
3.1 ELIGIBLE AREA 7
3.2 INVESTMENT/SELECTION CRITERIA 7
3.3 ELIGIBLE APPLICANTS 7
3.4 INELIGIBLE APPLICANTS 8
3.5 ELIGIBLE ACTIVITIES 8
3.6 INELIGIBLE ACTIVITIES 8
3.7 MINIMUM REQUIREMENTS 8
3.8 TYPES OF AWARDS 9
SECTION 4: TERMS AND CONDITIONS
4.1 TERMS AND CONDITIONS 10
SECTION 5: APPLICATION PROCEDURES
5.1 INITIAL CONTACT 12
5.2 TIMING 12
5.3 PRIORITY 12
5.4 LOAN APPLICATION 12
5.5 REVIEW PROCESS 13
SECTION 6: DISTRIBUTION OF FUNDS
6.1 LOAN PROCEDURES 14
6.2 GRANT PROCEDURES 15
SECTION 7: POST APPROVAL REQUIREMENTS
7.1 OBLIGATION OF LOAN RECIPIENT 16
SECTION 8: PERFORMANCE MONITORING 17
8.1 PRIVATE LEVERAGE COMMITMENTS 17
8.2 DEFAULT 17
SECTION 9: USE OF LOAN REPAYMENTS AND REPORTING
9.1 GREATER OSHKOSH CAPITAL CATALYST PROGRAM 18
SECTION 1o: LOAN SERVICING
10.1 MONITORING 19
10.2 RECORDKEEPING 19
ATTACHMENT A REQUIRED CERTIFICATION STATEMENT 21
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FOREWORD
In 2016,the Greater Oshkosh Economic Development Corporation and the City of Oshkosh, after two
successful years of the Greater Oshkosh Revolving Loan Fund, recognized the need for a targeted funding
initiative designed to assist start ups and entrepreneurs in greater Oshkosh, or looking to locate in Greater
Oshkosh.
The Capital Catalyst Fund was developed with funds reallocated from the Greater Oshkosh Revolving Loan
Fund and funding from the Wisconsin Economic Development Corporation (WEDC).The fund can be used as a
grant or a loan and to be used for businesses engaged in specific sectors with strong impact and growth
trajectory in the City of Oshkosh. Impact,for the purpose of this program,is defined as any growth activity
that contributes positive economic impact for the of City of Oshkosh.
This manual contains the Capital Catalyst Fund policies and procedures that have been adopted locally to
govern the use of these funds.
For further assistance and guidance,please feel free to contact:
Greater Oshkosh Economic Development Corporation (GOEDC)
238o State Road 44, Suite B, Oshkosh,WI 54904
Telephone: (920) 230-3321
www.Greater0shkosh.com
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SECTION is GENERAL PROVISIONS
1.1 PURPOSE
The purpose of the policies and procedures contained in this manual are to outline the nature and scope
of the funds and how they may be used as seed funds. The policy manual will be collectively referred to
as the Capital Catalyst Fund.
The Fund will make grants, debt and equity investments in start up and early stage businesses. Funds
will be invested into innovation based businesses located in, or those that will locate within,the City of
Oshkosh or those businesses having a direct effect upon the local economic well-being of the City.
Industry sectors of focus will include,but are not limited to: Advanced Manufacturing/Aerospace,
Information Systems/Software,Agriculture/Food Processing, Medical Devices and Research, and
Biosciences and Energy.The fund will not work with businesses whose primary market is direct
consumer purchased retail, restaurant or hospitality industry sectors.
1.2 PROGRAM OBJECTIVES
Seed Capital Fund awards made available through this program are intended to meet the following
objectives:
1. To assist with the creation of innovation based investment companies who are in the early stages of
development or the start up phase.
2. To encourage the creation and retention of quality jobs which provide a wage appropriate to the
skills and experience of the local workforce.
3. To encourage the leveraging of the existing Revolving Loan Fund with the City of Oshkosh in the
form of mixed asset investment particularly in the area of innovation technology.
4. To establish the fund as evergreen within five years for the long term financing of this program.
5. To assist in the relocation or attraction of new businesses and capital to increase the tax base.
6. To target opportunities that are in alignment with the Greater Oshkosh Economic Development
Corporation(GOEDC) strategic plan.
1.3 AMENDMENTS
The Greater Oshkosh Economic Development Corporation may from time to time amend the policies
and procedures contained in this document. Any such changes are subject to the written approval by
the Wisconsin Economic Development Council (WEDC) and with consent of the Oshkosh City Council.
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SECTION 2: ADMINISTRATION
2.1 LOAN REVIEW COMMITTEE
1. The City of Oshkosh Common Council (City) has designated the Revolving Loan Fund Committee of
the Greater Oshkosh Economic Development Corporation (GOEDC) and its staff as responsible for
the administration, monitoring and promotion of the Capital Catalyst program. GOEDC shall also be
responsible for identifying potential businesses who may take advantage of the Capital Catalyst
program, pricing and appraising development opportunities, the review of Capital Catalyst requests
and their related consultative and technical services.
2. The Revolving Loan Fund Committee shall be responsible for funding decisions relative to Capital
Catalyst loans/grants.
3. The Revolving Loan Fund Committee shall have the authority to make policy recommendations for
the administration of the Capital Catalyst program. Quarterly activity reports shall be provided to the
City Council that contain information referenced in section 2.3.
4. The Chief Executive Officer of GOEDC or designee(hereinafter called"staff') shall be responsible for
the day-to-day administration of the Greater Oshkosh Capital Catalyst program. GOEDC is
responsible for explaining the Greater Oshkosh Capital Catalyst program to prospective applicants,
providing written information, assisting applicants in completing applications, processing requests
for financing, and,where necessary and appropriate, counseling and guiding loan applicants to other
more appropriate technical and financial resources when the loan applicant has needs that cannot be
met through the Greater Oshkosh Capital Catalyst program.
S. GOEDC shall periodically, but no less than annually, review financial statements and loan
amortization schedules for Greater Oshkosh Capital Catalyst loan recipients. GOEDC is responsible
for the maintenance of all records for the Greater Oshkosh Capital Catalyst Program.
6. GOEDC shall prepare all loan agreements, review all promissory notes and mortgage or lien
instruments, and record Greater Oshkosh Capital Catalyst security instruments. Staff,with guidance
from the Revolving Loan Fund Committee and legal counsel shall negotiate, prepare and execute on
matters of default.
2.2 MEETINGS
Loan review meetings shall be held by the Revolving Loan Fund Committee on an as-needed basis.A
majority of the Revolving Loan Fund Committee in attendance at a meeting constituting a quorum shall
be required for official committee action.
2.3 RECORDS
Records of GOEDC, as a private contractor, shall not be deemed public records and GOEDC may
promise confidentiality of its records to those persons with which it deals. However, GOEDC and the
City agree that the following information is not confidential as to any project funded: amount of
funding; name and address of party to which funding was provided; the terms and conditions of the
funding agreement; the purpose of the funding; the public benefit;jobs impacted; and the total project
budget. Additionally, any aging, delinquency or"loan status"reports filed by GOEDC may contain
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specific loan status information for projects. Written records shall be maintained in appropriate files
located in a locked and fireproof place with limited access by authorized personnel.
2.4 LOAN FEES
1. Pre-Closing Fees include but are not limited to: These funds are used to pay for administrative costs
associated with the Greater Oshkosh Capital Catalyst program.
a) Loan Application Fee: GOEDC shall require a non-refundable loan application fee of$250 to
be paid at the time of loan application. The application fee may be waived at the sole discretion
of the Revolving Loan Fund Committee.
b) Loan Origination Fee: GOEDC shall require a loan origination fee of 1 percent of the Capital
Catalyst loan amount to be paid at the time of the loan closing.
c) Legal Fees: Payment of all legal fees and costs incurred by GOEDC for the Capital Catalyst
loan closing must be paid on or before the closing in a manner agreeable to both parties.
These funds are used to pay for administrative costs associated with the Greater Oshkosh
Capital Catalyst program
2. Post-Closing Fees: On an annual basis, up to 15 percent of the interest earned on the outstanding
Capital Catalyst loans repayments may be used for GOEDC Capital Catalyst administrative costs.
No principal repayments shall be used for administrative costs. The interest payments accrue from
all outstanding Capital Catalyst loans. GOEDC's administrative costs may include personnel costs
and other direct expenses related to administering the Capital Catalyst. GOEDC shall document the
annual administrative costs and shall provide the documentation to the Cie for approval prior to
transferring the annual administrative costs from GOEDC's Capital Catalyst Fund to another
GOEDC Fund.On an annual basis,tip to -15 per-eent of the Greater-Oshkosh Capital CffWyst pr-egr-am
ineeme,iA411 be made available fer-personnel eests and other-administrative exp �d by
GOEDC i the m nt r nee of the ram,-eater-Oshkosh Capital C + yst
2.5 FUND DEVELOPMENT/INVESTMENTS
The;-funds for the Capital Catalyst I Fund wiIHbewere provided from the following sources:
- A grant of$125,000 from the Wisconsin Economic Development Corporation
Matching funds of$125,000 from the City of Oshkosh Revolving Loan Fund
Funds for the Capital Catalyst II Fund were provided from the following sources:
- A grant of$125,000 from the Wisconsin Economic Development Corporation
- Matching funds of$125,000 from the City of Oshkosh Revolving Loan Fund($70,000) and
remaining assets from Chamco, Inc. ($55,000)
Loan repayments (principal, interest, and equity disbursements)will be returned to the Capital Catalyst
Fund for continued growth and disbursement.
The Capital Catalyst Fund will follow WEDC program guidelines and provide a minimum of one-third
of the Capital Catalyst Fund as grants, not to exceed $125,000. The remaining two-thirds will be used to
provide capital investments that is in the best interest of the applicant, as well as in the best interest of
making the Capital Catalyst Fund evergreen.
The returns on the investments will be reinvested in the Capital Catalyst Fund and will be reviewed by
the staff and Revolving Loan Fund Committee on a regular basis to ensure the funds are growing and
being utilized effectively to ensure continued entrepreneurial growth in the Oshkosh community.The
information on the investment returns will be reported to WEDC and the City of Oshkosh on a regular
basis.
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SECTION 3: ELIGIBILITY CONSIDERATIONS
3.1 ELIGIBLE AREA
The area served by the Greater Oshkosh Capital Catalyst program shall be within the corporate limits of
the City of Oshkosh. Exceptions may be made by a two-thirds vote of the GOEDC Board of Directors for
projects that occur in the communities contiguous to the City of Oshkosh with demonstrated significant
benefit to the citizens of the City of Oshkosh.
3.2 INVESTMENT/SELECTION CRITERIA
In addition to reviewing the business structure and financial soundness of the applicant,the following
criteria will be used when reviewing applicants:
1. Will they stay in the greater Oshkosh area throughout the life of the investment?
2. Will they create and retain jobs?
3. Will the project result in a positive economic impact to the taxpayers in the City of Oshkosh and
Winnebago County?
4. Will they assist in attracting additional businesses and capital to increase the tax base?
The Capital Catalyst Fund will be looking to make sound seed capital investments in local businesses.
The staff and Revolving Loan Fund Committee will not be looking to invest in a certain number of
businesses per year,but will be looking at the scalability/workforce impact/growth potential of the
applicant.
3.3 ELIGIBLE APPLICANTS
1. Any viable private enterprise planning to start their business in the City of Oshkosh.
2. No member of the Common Council; GOEDC Board of Directors; the Revolving Loan Fund
Committee; employee of GOEDC; or any other official, employee, or agent of the City who exercises
decision-making functions or responsibilities in connection with the implementation of the Greater
Oshkosh Capital Catalyst program is eligible for financial assistance under this program. In addition,
no Greater Oshkosh Capital Catalyst loans shall be made which are in conflict with Section 946.13 of
the Wisconsin Statutes (Private Interest in Public Contract Prohibited).
3. Applicants shall not be disqualified based on age, race, religion, color, handicap, sex, physical
condition, development disability as defined in S. 51.01(5), sexual orientation or national origin.
4. With exceptions, funding will be primarily targeted to applicants from the Capital Catalyst Fund that
fall under the following target sectors of industry:
a. Advanced Manufacturing/Aerospace
b. Information Systems/Software
c. Agriculture/Food Processing
d. Medical Devices and Research
e. Biosciences and Energy
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3.4 INELIGIBLE APPLICANTS
Greater Oshkosh Capital Catalyst loans/grants shall not be available for the following businesses:
1. Any entity not serving the interests of City of Oshkosh
2. Ineligible industry sectors are as follows:
a. Real Estate
b. Retail
c. Hospitality
d. Restaurants
3.5 ELIGIBLE ACTIVITIES
Allowable investments from the Capital Catalyst Fund include:
1. Acquisition of land,buildings, and fixed equipment
2. Feasibility studies, consulting fees,legal fees associated with project development
3. Site preparation and construction or reconstruction of buildings (including leasehold
improvements)
4. Installation of fixed equipment
5. Working capital for inventory and direct labor costs
6. Marketing of new products/emergence into new markets
7. Other activities that the Revolving Loan Fund Committee may identify during the
administration of the program
3.6 INELIGIBLE ACTIVITIES
Ineligible use of funds includes:
1. Refinancing or consolidating of existing debt
2. Reimbursement for expenditures made prior to application approval, unless previously
negotiated
3. Specialized equipment that is not essential to the business operation
4. Residential construction or reconstruction unless such reconstruction is intended to convert the
use of the residential building to a business or industrial operation
5. Routine maintenance
6. Other activities that the Revolving Loan Fund Committee may identify during the
administration of the program
3.7 MINIMUM REQUIREMENTS
To be eligible for funding, a proposed project shall meet all of the following minimum requirements:
1. Private Funds Leveraged. One dollar of private sector investment or collateral shall be provided for
each dollar of Capital Catalyst investment.Private investment is defined as new equity injected and/or
financing from private lending institutions or public sector loan programs other than the Greater
Oshkosh Capital Catalyst Fund. The applicant contribution to the project will be determined by the
private lending institution. [Not applicable to grant awards.]
On a selective basis the Greater Oshkosh Capital Catalyst may participate at levels higher than one
dollar for each dollar of private sector investment subject to demonstration of substantial project. In
such cases, approval for the loan will be required by the GOEDC Board of Directors.
s
2. Financial Feasibility and Business Viability. The applicant shall demonstrate that the proposed
project is viable and that the business has the reasonable potential to repay the funds.
3. Compliance with Applicable Laws. Applicants shall comply with all applicable local,State and Federal
laws and codes.
4. Project Completion. Each loan project completion timeline will be customized to the needs of the
project and the discretion of the Revolving Loan Fund Committee.
3.8 TYPES OF AWARDS
The Revolving Loan Fund Committee will recommend that funds be awarded to an applicant in one or
more of three ways. They are:
1. Direct grant of funds,with no required repayment.
2. An investment of funds where the Capital Catalyst Fund takes an equity position within the
company as a form of repayment of the loan. The equity position may be no more than 19%of the
total equity.
3. A loan that contains an amortization schedule with required payments of both principal and
interest. A balloon payment may be negotiated as part of the initial loan agreement.
4. A deferral of initial loan payments may be negotiated in order to assist the business in its start up
phase.
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SECTION 4: TERMS AND CONDITIONS
4.1 TERMS AND CONDITIONS
Loan terms and conditions shall be structured on the basis of need and ability to repay and will be
outlined in a commitment letter to the applicant. Minimum standards include the following:
1. Grant Amount. Grants will be limited to $10,00o per entity. These grants do not have a repayment
component. The grant amount can exceed $10,00o per entity if approved by a two-thirds vote of the
GOEDC Board of Directors.
2. Loan Amount. The amount of funds available for any single business enterprise shall range
from a minimum of$10,00o to a maximum of$100,000.
3. Interest Rate. The interest rate on each loan shall be determined on a case-by-case basis by the
Revolving Loan Fund Committee,balancing risk and return for City of Oshkosh, as well as applicable
margins to cover associated costs. The interest rate may or may not be fixed for the life of the loan.
4. Loan Term. The specific term of the loan will be determined on a case by case basis, designed around
generating maximum success and outcomes. The Revolving Loan Fund Committee will use current
Revolving Loan Fund and industry standards as foundational guidelines.
S. Repayment. Deferral of principal payments may be provided, but will be determined on a case by
case basis designed around generating maximum project success and outcomes. Payments will be
made via direct automatic electronic withdrawal.
6. Prepayment. There are no prepayment penalties.
7. Collateral. Collateral requirements shall be determined on an individual basis by the Revolving Loan
Fund Committee and may include: mortgages on land and buildings, liens on machinery and
equipment, liens on accounts receivable and inventory, and/or liens on the corporate assets of
affiliated businesses, where appropriate. This collateral may be subordinated to private sector
financial institutions participating in the Capital Catalyst Fund, if required. Unlimited personal
guarantees from the principals of the business who have 20 percent ownership or more shall be
required, along with junior mortgages on personal residences. In addition, limited personal
guarantees may be required for the owners of the business who have less than 20 percent ownership.
If personal guarantees are not feasible or acceptable, a higher interest rate may be charged.
8. Insurance Requirements. Businesses receiving loans for fixed assets shall be required to obtain
property-casualty insurance for the appraised market value of the property being financed, and
businesses receiving construction loans shall be required to have builder's risk insurance for the
amount of the debt financing attendant to the project. GOEDC and the City shall be listed as an
additional insured on all such insurance policies.
9. Equity Requirements. The Greater Oshkosh Capital Catalyst Fund may require an equity injection
from the applicant for each Greater Oshkosh Capital Catalyst loan,when appropriate. Consideration
will be given for individuals that have made substantial equity commitments to the applicant business,
as well as to the individuals who do not have sufficient financial resources to contribute to the Greater
Oshkosh Capital Catalyst Fund.
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10. Structure. The Revolving Loan Fund Committee may offer multiple approaches with minimum
standards,as noted in section 4.1,including the possibility of participation agreements with approved
partners.
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SECTION 5:APPLICATION PROCEDURES
5.1 INITIAL CONTACT
Prior to submitting an application, all Greater Oshkosh Capital Catalyst applicants must discuss the
program with staff,who will provide assistance, as is necessary, in completing a Greater Oshkosh
Capital Catalyst application.All financial information shall be kept in a secured place with limited
access by authorized personnel.
5.2 TIMING
Applications may be submitted at any time during the calendar year.
5.3 PRIORITY
Applications shall be reviewed in the order received and based on readiness for the proposed project to
proceed. In those instances where the number of requests for Greater Oshkosh Capital Catalyst funds
exceeds available funding, Greater Oshkosh Capital Catalyst applications shall be prioritized based
upon:
1. Overall impact of project
2. Date of receipt of all requested application materials
3. Leveraging growth of existing businesses in City of Oshkosh
4. Relocation or attraction projects
5.4 LOAN APPLICATION
Applicants shall submit an application using forms available from GOEDC that includes the following:
1. Greater Oshkosh Capital Catalyst Application
2. Business Plan
3. Financial Statements
Applicants must complete the application checklist to ensure all supporting documentation is included
before submitting an application to GOEDC.
Applicants will be expected to fill out the Capital Catalyst Fund application (to be developed)that will
include the following:
1. Business Description:A written description of the business including:
a. A brief history of the existing or proposed business, including when it started or is to start,
type of operation,legal structure, market and products
b. Potential markets and customers
c. Resumes of each principal associated with the business including number of years
experience in the business, educational background, and role in the business
d. A financial history, if available, of the business including balance sheets, profit/loss
statements, and cash flow statements. Personal income taxes for the past three years may
also be required.
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2. Fund Sources:A detailed description of the sources and uses of the funds needed for the project,
including Capital Catalyst funds,private sector funds, equity, etc.
3. Projected Expenditures: A detailed summary of any and all uses of the total sources of funding,
including a budget and capital expenditures. In addition, copies of lease agreements should also be
submitted.
4. Projections. Provide pro formas (a balance sheet,income statement and cash flow statement)
covering a three-year period based on the assumption that the business will obtain the requested
award from the Capital Catalyst Fund.
5. Additional Information.Additional information may be requested by the Selection/Investment
Committee or the Fund Manager.
5.5 REVIEW PROCESS
Specific steps in the review process include the following:
1. Preliminary Review. GOEDC shall review the application for completeness and verify that the
proposed project meets the minimum requirements provided in Section 3.6. If the application is not
complete, staff will inform the applicant of the deficiencies.
2. Formal Review. The Revolving Loan Fund Committee shall meet to review an application within 30
days of the receipt of a completed application.
3. Negotiation of Terms. Upon acceptance by the Revolving Loan Fund Committee, staff shall contact
the business to review and explain the terms of the loan.
4. Notice of Award. If the application is approved, a closing shall be scheduled to execute the necessary
loan documents. All loan closings shall occur within go days of acceptance. The award of a Capital
Catalyst Fund loan and/or grant does not warrant or guarantee approval of the project by the City of
Oshkosh City Council or City of Oshkosh Planning Commission. The approval is only for the Capital
Catalyst Fund program.
S. Rejection of Award. If the application is not approved,staff shall notify the applicant in writing of the
reasons for rejection and offer to meet with the applicant to explore ways to strengthen the loan
request or to identify alternative funding sources.
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SECTION 6: DISTRIBUTION OF FUNDS
6.1 LOAN PROCEDURES
Prior to releasing funds,the following documentation shall be in place or provided at the appropriate
time during the term of the loan.
1. Loan Approval. The Revolving Loan Fund Committee shall review and approve a complete application
for each eligible Capital Catalyst applicant.
2. Loan Agreement. GOEDC or the designee shall prepare a loan agreement which shall be executed by
Staff and/or the Chairman of the Revolving Loan Fund Committee, as well as the authorized
representatives of the business.
3. Promissory Note. A promissory note shall be prepared by GOEDC or designee and signed by the
authorized representatives of the business at the time of loan closing.The note shall be dated,reference
the agreement between GOEDC and the business, and specify the amount and terms of the loan funds
to be delivered.
4. Security. Mortgage and/or lien instruments and personal guarantees provided as security for all loans
shall be prepared by GOEDC or designee and executed at the time of the loan closing. GOEDC or
designee shall record all security instruments and place copies in the project file, as applicable, to
include:
a) Mortgage and/or security agreement
b) UCC searches and filing
c) Guarantee agreement
d) Title insurance or letter report
e) Construction disbursements
f) Assignment of life insurance
g) Property-casualty insurance binder
h) Personal guarantee
i) Other documentation as may be appropriate
S. Evidence of Permits. Documentation must be provided by the applicant that all necessary permits,
licenses and any other registrations required have been obtained by the applicant prior to the release
of program funds.
6. Amortization Schedule. An amortization schedule shall be prepared by staff and forwarded to the loan
recipient prior to closing and attached to both parties' copies of the loan agreement.
7. Evidence of Program Expenditures. Documentation shall be provided by the applicant to evidence
Greater Oshkosh Capital Catalyst program expenditures prior to the release of funds. Documentation
may include invoices or receipts for materials and supplies, purchase orders, final bills of sale, letters
from lenders,and/or canceled checks.All required documentation shall be determined by staff and the
applicant at the time of the loan application in order to address the specific project needs. All
documentation shall be reviewed and approved by staff.Staff shall also verify the installation of all fixed
equipment.
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8. Other Documentation. Documentation shall be provided by the applicant to evidence that all required
permits,licenses, and registrations have been obtained prior to the release of Capital Catalyst funds.As
appropriate or necessary,the borrower may also be asked to provide the following documentation:
a) Certificate of Status from the Department of Financial Institutions
b) Articles of incorporation and by-laws
c) A resolution or agreement to borrow funds
d) Current financial statements
e) Evidence of having secured other funds necessary for the project
f) An environment analysis for real estate loans,if justified
With the above documentation in place,the staff will schedule a loan closing.All documents will be
executed before funds are disbursed, and mortgages and UCC Statements shall be recorded with the
Register of Deeds ,the Department of Financial Institutions and the City of Oshkosh.
6.2 GRANT PROCEDURES
Prior to releasing funds, the following documentation must be in place or provided at the appropriate
time regarding the grant.
1. Notice of Award. The Revolving Loan Fund Committee shall review and approve a complete
application for each eligible Capital Catalyst applicant.
2. Grant Agreement. GOEDC or the designee shall prepare a grant agreement which shall be executed
by Staff and/or the Chairman of the Revolving Loan Fund Committee, as well as the authorized
representatives of the business.
3. Evidence of Permits. Documentation must be provided by the applicant that all necessary permits,
licenses and any other registrations required have been obtained by the applicant prior to the release
of program funds.
4. Evidence of Program Expenditures. Documentation shall be provided by the applicant to evidence
that all required permits,licenses,and registrations have been obtained prior to the release of Capital
Catalyst funds.As appropriate or necessary,the borrower may also be asked to provide the following
documentation:
g) Certificate of Status from the Department of Financial Institutions
h) Articles of incorporation and by-laws
i) A resolution or agreement to borrow funds
j) Current financial statements
k) Evidence of having secured other funds necessary for the project
1) An environment analysis for real estate loans,if justified
With the above documentation in place, the Fund Administrator will schedule a Grant closing. All
documents will be executed before funds are disbursed.
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SECTION 7: POST APPROVAL REQUIREMENTS
7.1 OBLIGATION OF LOAN RECIPIENT
In addition to the terms and conditions of the loan, all borrowers must agree to comply with the
following:
1. Not to discriminate on the basis of age, race, religion, color, handicap, sex, physical condition,
development disability as defined in s. 51.01(5), sexual orientation, or national origin in any
employment or construction activity related to the use of Capital Catalyst monies.
2. To use Greater Oshkosh Capital Catalyst monies only to pay the cost of services and materials
necessary to complete the Greater Oshkosh Capital Catalyst project or activity for which the funds
were awarded.
3. To permit inspections by persons authorized by GOEDC of all projects and properties assisted with
loan funds. Related project materials shall also be open to inspections which include,but may not be
limited to: contracts, materials, equipment, payrolls, and conditions of employment. Requests for
inspection shall be complied with by the borrower. Such inspections will occur at least annually.
4. To maintain records on the project that are necessary for GOEDC to determine if the performance of
the business complies with the terms of the loan agreement. Files shall be maintained as long as the
loan is active or for at least three years after completion of the work for which the loan has been
obtained,whichever is longer.
S. To submit the following documentation during the outstanding term of the Greater Oshkosh Capital
Catalyst loan:
a. Quarterly financial statements that are certified by the borrower
b. Signed copies of corporate Federal income tax returns
c. Evidence of loan use
6. To maintain property-casualty insurance for the property financed with Greater Oshkosh Capital
Catalyst monies for the term of the Greater Oshkosh Capital Catalyst loan.The City and GOEDC shall
be listed as an additional insured on the policy. In addition, key-person life insurance coverage
naming the City and GOEDC as a beneficiary,with a declining balance equal to the outstanding loan
balance may be used where appropriate
7. To abide by all Federal laws, when applicable. These include, but may not be limited to: the Civil
Rights Act of 1964; the Age Discrimination Act of 1975; the Contract Work Hours and Safety
Standards Act; the Copeland"Anti-Kickback"Act; and, all regulations pursuant to these Acts.
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SECTION 8: PERFORMANCE MONITORING
8.1 PRIVATE LEVERAGE COMMITMENTS
Staff shall monitor the use of the funds and expenditure of private leverage commitments.
Documentation shall include invoices or receipts for materials and supplies,letters from lenders,final
bills of sale, and/or cancelled checks.
8.2 DEFAULT
In the event the business is in default on any of the terms and conditions of the loan agreement, all
sums due and owing,including penalties and clawbacks shall, at GOEDC's option,become immediately
due and payable. Interest penalties and clawbacks are determined according to the"Impact"
justifications made as part of the application and incorporated into the loan agreements.To exercise
this option, staff shall provide a written notice to the business. The notice will specify the following:
1. The default
2. The action required to cure the default
3. A date, not less than 3o days from the date of the notice, by which the default shall be cured to
avoid foreclosure or other collective action
4. Any penalties incurred as a result of the default
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SECTION 9: USE OF LOAN REPAYMENTS AND REPORTING
9.1 GREATER CAPITAL CATALYST PROGRAM
Repaid Greater Oshkosh Capital Catalyst monies shall be deposited in the Greater Oshkosh Capital
Catalyst account and used in a manner consistent with the Greater Oshkosh Capital Catalyst manual.A
separate record for each loan shall be kept to account for all funds loaned.
GO-EDC shall contract with a licensed certified public accountant(CPA)to conduct an annual financial
audit of GO-EDC. GO-EDC will contract with a CPA to include the procedures listed below. A copy of
the financial audit will be submitted by GO-EDC to the City annually by March 1st of each e'er.
Audit Procedures:
1) GO-EDC would provide yearend financial statements for the Capital Catalyst money.
2) An independent accountant would verify the year end bank account balance(s) and provide copies
of the year end reconciliations.
,j) An independent accountant would confirm outstanding loan balances directly with the borrowers
and provide copies of the confirmations.
4) An independent accountant would confirm outstanding amounts payable to the City for
agreement with City records.
.,) A standard agreed upon procedures report would be prepared by the independent accountant
indicating the findings of the procedures performed.
6) Test individual Capital Catalyst account files for evidence of compliance with loan terms and
conditions.
a. The number of files to be tested annually will be mutually agreed upon by GO-EDC and
the City.
The Capital Catalyst fund program was established with available cash balances from multiple TIF
closures. To ensure accountability and transparency of these funds it is important to establish
procedures in which program income (interest repayments) are secured and accounted for by GO EDC
as well as the City.
GO EDC shall establish a mechanism to document each repayment received from a grantee. Each
repayment shall be recorded to separate the amount of principal and interest being repaid. All loan
repayments all be maintained in a separate bank account and not comingled with other cash funds at
GO EDC. All Capital Catalyst funds must be held in an interest bearing account, and interest paid on
Capital Catalyst fund balances must be remitted to the City of Oshkosh not less than annually. GO EDC
will be allowed to maintain City funds equal to the match required by WEDC for the duration of the
fund.Any amount of City funds exceeding the WEDC match shall at the City's option,be returned to the
City--
Quarterly
GO EDC shall submit a report which reconciles total amount of revolving loan funds issued
from the City to GO EDC. This reconciliation shall include the total of outstanding loan balance(s),the
1�percent of the Capital Catalyst loan/origination fees (retained by GO EDC for administrative costs),
and principal interest income currently being held by GO EDC. After this reconciliation is complete GO
EDC will remit quarterly to City of Oshkosh all Capital Catalyst funds which are above their minimum
balance.All Capital Catalyst funds shall be monitored on a regular basis to ensure that the money is
actively being used for eligible activities.
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SECTION io: LOAN SERVICING
1o.1 MONITORING
GOEDC staff shall monitor each loan to ensure compliance with the loan terms and conditions and to
monitor the financial health of the business to ensure continued repayment of the loan. The monitoring
will also ensure that all recordkeeping requirements are met particularly with regard to the expenditure
of matching funds.
10.2 RECORDKEEPING
A loan servicing file shall be established and maintained for each loan recipient that includes:
Loan Application File. The loan application file shall include:
a. A copy of the Capital Catalyst application
b. Business plan documents
c. Business plan financial statements,personal financial statements
d. Other supporting loan information submitted to GOEDC,including all applicable correspondence
including underwriting analysis
e. A copy of the loan application summary with recommended actions regarding the application.
These documents are secured in a locked and fireproof filing cabinet.
Loan Closing File. The loan closing file shall include:
a. All loan closing documents,including the note and other security instruments
b. Certificates of insurance for builder's risk,property-casualty, and life insurance, as applicable
c. Documentation for job creation and retention
This file shall be placed in a locked, fireproof filing cabinet. Staff shall be involved in helping create and
complete this file to ensure complete loan documentation. Copies of the loan closing documents and an
amortization schedule shall be provided to the loan recipient, along with an invoice for loan application
and origination fees.
1. Financial Management File. Greater Oshkosh Capital Catalyst financial management records shall
be maintained that include the following registers:
a. Greater Oshkosh Capital Catalyst Register: A record of all deposits and disbursements to and
from the Capital Catalyst,including funds used for Capital Catalyst administration.
b. Greater Oshkosh Capital Catalyst Loan Repayment Register: A record of all repayments made by
each business that has received a loan from the Capital Catalyst, as well as the balance of
repayments from all Greater Oshkosh Capital Catalyst loans. This report will be reviewed at least
quarterly by the Revolving Loan Fund Committee.
c. Collection Register: A register for each loan that contains the business name, loan date, loan
amount,terms, and date repayment begins.
2. "Tickler File" System. A tickler file system shall be established and maintained to ensure that loan
repayments, financial information, the loan agreement, UCC updates, and other documentation
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requirements are tracked and obtained as required. The system will include the following monthly-
coded index files:
a. Expiration dates for property-casualty and/or life insurance policies
b. Due dates for all financial statements
c. Expiration dates for UCC Financing Statements, the reminder to update being at least 45 days
prior to the expiration of the UCC filing on hand
d. Scheduled dates of annual loan performance and covenant reviews
e. Dates for site visits
f. Due dates for property tax payments
g. Review dates for job monitoring, and
h. Dates on which loan recipients will be notified of scheduled changes in the loan amortization
scheduled per loan agreements
3. Financial Statement File. The financial statement file shall include the business'quarterly and annual
financial statements as required by the loan covenants with a statement indicating that staff reviewed
the data.
4. Field Visit File. Staff shall make periodic site visits to verify information in the progress report and
financial statements.A summary of each site visit will be placed in the permanent file, including any
information that can assist in rating the overall condition/risk of the loan.
5. Repayment Monitoring File. The repayment monitoring file shall include the loan amortization
schedule and status of payments on the Greater Oshkosh Capital Catalyst loan. Observations
regarding concerns or problems shall be reported to the City and notations placed in the tickler file to
remind staff of the need to provide continued monitoring.
6. Loan Review File. All loans shall be reviewed on an annual basis, and at such other times as may be
deemed necessary by GOEDC and the City. The review will follow receipt of the fiscal year-end
financial statements,the year-end progress reports,and site visits.A report on the loan review will be
placed in the file and address the following: timeliness of monthly payments; condition of collateral
securing the loan and status of security documents; overall financial condition of the business; the
presence of material liens or lawsuits; and violations of loan covenants and suggested corrective
actions.
If the business is experiencing problems, staff shall work with the loan recipient to identify actions that
are needed to correct the identified deficiencies,including possible restructuring of the loan to improve
cash flow within the business. If appropriate, staff shall arrange for business assistance, including
services available through the University of Wisconsin-Extension, Small Business Development Center
(SBDC),the Service Corp of Retired Executives (SCORE), and/or other entities having an interest in
serving the needs of businesses.
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Attachment A Required Certification Statement
The undersigned hereby:
1. Certifies that to the best of the applicant's knowledge and belief,the information being submitted to
GOEDC as part of the Greater Oshkosh Capital Catalyst Program Application is true and correct.
2. Certifies that the applicant is in compliance with all laws, regulations, ordinances and orders of public
authorities applicable to it.
3. Certifies that the applicant is not in default under the terms and conditions of any grant or loan
agreements,leases, or financing agreements with its other creditors.
4. Certifies that GOEDC is authorized to obtain a credit check and Dun and Bradstreet on the applicant,
the business and/or the individual(s).
5. Certifies that the applicant has disclosed and will continue to disclose any occurrence or event that
could have an adverse material on the project. Adverse materials includes but is not limited to lawsuits,
criminal or civil actions,bankruptcy,proceedings, regulatory intervention or inadequate capital to
complete the project.
6. Applicant requests that GOEDC treat the following items,if provided, as TRADE SECRET:
Yes No NA
A. Personal financial statements. ❑ ❑ ❑
B. Personal or business tax returns. ❑ ❑ ❑
C. Historical business financial statements. ❑ ❑ ❑
D. Business financial projections. ❑ ❑ ❑
E. Business Plan ❑ ❑ ❑
F. Other ❑ ❑ ❑
Signature: Date:
(Applicant)
Name: Date:
(Applicant)
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