HomeMy WebLinkAbout19. 14-543
DECEMBER 9, 2014 14-543 RESOLUTION
(CARRIED__7-0_____LOST________LAID OVER________WITHDRAWN________)
PURPOSE: APPROVE ECONOMIC DEVELOPMENT REVOLVING LOAN
FUND PROGRAM MANUAL
INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT
WHEREAS the City’s 2013 Strategic Plan identified the goal of creating
additional sources of capital to leverage private investment for economic development
projects in Oshkosh; and
WHEREAS the City Council has allocated cash balances from closing TIDs #6,
#8 and #9 to fund a new Economic Development Revolving Loan Fund (RLF); and
WHEREAS City staff has worked with the Long Range Finance Committee and
Greater Oshkosh Economic Development Corporation (GO-EDC) to draft a program
manual for administering said RLF.
NOW THEREFORE BE IT RESOLVED that the Common Council of the City of
Oshkosh hereby approves the attached Economic Development Loan Fund Program
Manual to be administered by GO-EDC and the proper City officials are hereby
authorized to take those necessary steps to implement said program.
Ci of Oshkosh �
tY `r'
Community Development Department Q HK� H
215 Church Avenue, Oshkosh,WI 54901 ON THE WATER
TO: Honorable Mayor and Members of the Common Council
FROM: Allen Davis, Community Development Director
DATE: December 2, 2014
SUBJECT: Economic Development Revolving Loan Fund Program Manual
Background
The City's 2013 Strategic Plan identified the goal of creating additional sources of
capital to leverage private investment for economic development projects in Oshkosh.
In order to help achieve that goal, the City Council has allocated cash balances from
closing TIDs #6, #8 and #9 to fund a new Economic Development Revolving Loan Fund
(RLF). City staff has worked with the Long Range Finance Committee to draft a
program manual for administering the RLF. The program manual contains the rules
and regulations for the RLF.
Analysis
The Revolving Loan Fund is being established to be a flexible, gap financing tool for
businesses producing high-income jobs, through projects that expand, attract or retain
those jobs. The General Provisions of the Manual identify private funding leverage,
quality jobs, relocation or attraction of jobs, and target opportunities aligned with the
GO-EDC Strategic Plan.
The target markets for the RLF include businesses exporting outside the Oshkosh area,
firms growing at rates faster than the overall economy, and businesses that are
positioned for future success through innovation, high quality, technology and high
performance.
The proposed program manual is based on best-practices gathered from other RLFs
around the state and nation and Oshkosh's goals for economic development and
comments from the Long Range Finance Committee. The draft manual has also been
reviewed by many local bankers and lenders, the City auditor and GO-EDC.
GO-EDC is the best choice for administrator for the RLF since it can maintain the
confidentiality of the loan applicants. GO-EDC will be charged with creating a Loan
Committee, administering and monitoring the loans and repayments, and reporting the
results to the City on a regular basis.
The criteria for an RLF loan include:
• Eligible applicants — private enterprises with at least 2 years of financial history.
• Eligible activities —financing new projects including land acquisition, building,
fixed equipment, inventory, working capital and others.
• Private Funds leveraged — at least 1:1 private funding
• Cost per job - $12,500 per job
• Loan Amount - $50,000 to $200,000
• Term and Interest Rate —flexible
While most loans are expected to be made for projects within the City limits, there is the
possibility that a project could be located in the surrounding towns that would have a
large positive impact, and two-thirds of the GO-EDC Board could approve the loan.
GO-EDC's compensation for administering the RLF will be 15% of the RLF interest
payments received, not on the principal amount repaid.
The RLF program will also complement other economic development activities including
UW-Oshkosh Accelerator program that will identify and train entrepreneurs, Angels on
the Water, a local venture capital fund, and other state and/or federal programs
designed to encourage economic development. Lastly, the RLF will also set Oshkosh
ahead of many competitors in the business attraction arena.
Fiscal Impact
The funding for the RLF is based on the cash balances generated by the economic
development results in TIDs #6, #8 and #9. The 2015 budget transfers funds from
closing TID #9 to the RLF and brings the total balance to about $2.4 million.
Recommendation
The City Council approves the proposed Economic Development Revolving Loan Fund
Program Manual.
Approved,
--�
t����2��.`_ .
Mark Rohloff, City Manager
REVOLVING LOAN FUND
City of Oshkosh
PROGRAM MANUAL
Approved: ---------, 2014
Greater Oshkosh Economic Development Corporation (GO-EDC)
,Oshkosh,WI
Telephone: (920) ----------- � Fax: (920)
E-mail:
www.�o-edc.com
DRAFT-FOR DISCUSSION PURPOSES ONLY
Revised 11/17/14
TABLE OF CONTENTS
Pa�e
FOREWORD 1
SECTION 1: GENERAL PROVISIONS 2
1.1 PURPOSE 2
1.2 OBjECTIVES 2
1.3 AMENDMENTS 2
SECTION Z:ADMINISTRATION 3
2.1 LOAN REVIEW COMMITTEE 3
2.2 MEETINGS 3
2.3 RECORDS 4
2.4 LOAN FEES 4
SECTION 3: ELIGIBILITY CONSIDERATIONS 5
3.1 ELIGIBLE AREA 5
3.2 ELIGIBLE APPLICANTS 5
3.3 INELIGIBLE APPLICANTS 5
3.4 ELIGIBLE ACTIVITIES 5
3.5 INELIGIBLE ACTIVITIES 6
3.6 MINIMUM REQUIREMENTS 6
SECTION 4:TERMS AND CONDITIONS 7
4.1 TERMS AND CONDITIONS 7
SECTION 5:APPLICATION PROCEDURES 8
5.1 INITIAL CONTACT 8
5.2 TIMING 8
5.3 PRIORITY 8
5.4 LOAN APPLICATION 8
5.5 REVIEW PROCESS 9
SECTION 6: DISTRIBUTION OF FUNDS 10
6.1 LOAN PROCEDURES 10
SECTION 7: POST APPROVAL REQUIREMENTS 11
7.1 OBLIGATION OF LOAN RECIPIENT 11
SECTION 8: PERFORMANCE MONITORING 12
8.1 PRIVATE LEVERAGE COMMITMENTS 12
8.2 JOB CREATION AND RETENTION 12
8.3 DEFAULT 12
SECTIOIV 9:USE OF LOAN REPAYMENTS AND REPORTING 13
9.1 RLF PROGRAM 13
SECTION 10: LOAN SERVICING 13
10.1 MONITORING 13
10.2 RECORDKEEPING 13
ATTACHMENT A REQUIRED CERTIFICATION STATEMENT 16
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FOREWORD
In (Month) 2014, the City of Oshkosh Common Council recognized the need for a targeted initiative
designed to accelerate quality job creation and growth of the tax base in a highly competitive economic
environment. A partnership between the City of Oshkosh (City) and Greater Oshkosh Economic
Development Corporation (GO-EDC) created the Revolving Loan Fund Program to address competitive
opportunities and concerns widely expressed within the local business community and citizens of the
City of Oshkosh.
The Revolving Loan Fund (RLF) was established to be a flexible gap financing tool for businesses
engaged in high-income and job growth through projects involving expansion and/or relocation in the
City of Oshkosh. Impact, for the purpose of this program,is defined as any growth activity that supports
significant return to the ta�c payers of City of Oshkosh.
This manual contains the RLF policies and procedures that been adopted locally to govern the use of
these revolving loan funds.
For further assistance and guidance,please feel free to contact:
Greater Oshkosh Economic Development Corporation(GO-EDC)
Oshkosh,WI
Telephone: (920)
Fax: (920)
E-mail:
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Revised 11/17/14
SECTION 1: GENERAL PROVISIONS
1.1 PURPOSE
The purpose of the policies and procedures contained within this manual is to present the criteria
which govern the economic development activities assisted with funds made available through
the City of Oshkosh Revolving Loan Fund (RLF)program.
1.2 OBJECTIVES
Economic development activities funded through the RLF program are intended to meet the following
objectives in City of Oshkosh:
1. To leverage the growth of existing businesses that supports a significant return to the tax
payers of the City of Oshkosh
2. To encourage the creation and retention of quality jobs
3. To assist in the relocation or attraction of new businesses and capital to increase the tax base
4. To target opportunities that are in alignment with the Greater Oshkosh Economic
Development Corporation (GO-EDC) strategic plan
Identified target markets for RLF projects include:
1. Driver industries:businesses exporting outside the greater Oshkosh region
2. Growth businesses: firms with earnings that increase at rates faster than the overall
economy
3. Businesses positioned for success through innovation, high quality, technology and high
performance
1.3 AMENDMENTS
The Revolving Fund Committee may from time to time amend the provisions imposed by the
policies and procedures contained within this RLF inanual 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 Commission (GO-EDC) and its
staff as responsible for the administration, monitoring and promotion of the RLF program.
GO-EDC shall also be responsible for identifying potential businesses who may take
advantage of the RLF program, pricing and appraising development opportunities, the
review of RLF requests and their related consultative and technical services.
2. The Revolving Loan Fund Committee shall be responsible for funding decisions relative to
RLF loans.
3. The Revolving Loan Fund Committee shall have the authority to make policy
recommendations for the administration of the RLF 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 GO-EDC or designee (hereinafter called "staff') shall be
responsible for the day-to-day administration of the RLF program. GO-EDC is responsible
for explaining the RLF 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 RLF program.
5. GO-EDC shall periodically, but no less than annually, review financial statements and loan
amortization schedules for RLF loan recipients. GO-EDC is responsible for the maintenance
of all records for the RLF.
6. GO-EDC shall prepare all loan agreements, review all promissory notes and mortgage or lien
instruments, and record RLF 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.
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2.3 RECORDS
Records of GO-EDC, as a private contractor,shall not be deemed public records and GO-EDC may
promise confidentiality of its records to those persons with which it deals. However, GO-EDC
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 GO-EDC may contain 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 RLF program.
a) Loan Application Fee: GO-EDC 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 RLF Committee.
b) Loan Origination Fee: GO-EDC shall require a loan origination fee of 1 percent of the
RLF loan amount to be paid at the time of the loan closing.
c) Legal Fees: Payment of all legal fees and costs incurred by GO-EDC for the RLF 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 RLF program
2. Post-Closing Fees: On an annual basis, up to 15 percent of the RLF program income will be
made available for personnel costs and other administrative expenses incurred by GO-EDC
in the maintenance of the RLF program.
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SECTION 3: ELIGIBILITY CONSIDERATIONS
3.1 ELIGIBLE AREA
The area served by the RLF program shall be within the corporate limits of the City of Oshkosh.
Exceptions may be made by a two-thirds vote of the GO-EDC Board of Directors for projects that
occur in the communities contiguous to the City of Oshkosh with demonstrated benefit to the
citizens of the City of Oshkosh.
3.2 ELIGIBLE APPLICANTS
1. Any viable private enterprise with at least two years of financial history seeking to grow operations
in City of Oshkosh. Exceptions to the requirement of two years of financial history may be made for
those situations in which a compelling case can be made for such exceptions.
2. No member of the Common Council; GO-EDC Board of Directors; the Revolving Loan Fund
Committee; employee of GO-EDC; or any other official, employee, or agent of the City who exercises
decision-making functions or responsibilities in connection with the implementation of the RLF
program is eligible for financial assistance under this program. In addition, no RLF 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.
3.3 INELIGIBLE APPLICANTS
RLF loans shall not be available for the following businesses:
1. Failing companies (bankruptcy reorganization,stage of foreclosure)
2. Start-up companies (less than two years of financial history)
3. Any entity not serving the interests of City of Oshkosh
3.4 ELIGIBLE ACTIVITIES
RLF loans shall be provided to eligible applicants for the following activities:
1. The acquisition of land,buildings,and/or fixed equipment
2. Inventory essential to the business operations
3. Site preparation, the construction and/or reconstruction of buildings, the rehabilitation
of buildings including leasehold improvements, and/or the installation of fixed
equipment
4. Clearance,demolition, or the removal of structures
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5. Working capital
6. Research and development
7. Intellectual property
8. Employee training
9. Marketing of new products or its emergence into a new niche
10. Employee recruitment and/or transfer
11. Interest rate buy-down with private sector lender
3.5 INELIGIBLE ACTIVITIES
Due to the intentional enhanced flexibility of this program, the GO-EDC RLF Committee reserves greater
flexibility to determine eligible uses; hence,specific exclusions are limited to:
1. Refinancing or consolidating existing debt.
2. Reimbursement for expenditures made prior to loan approval.
3. Residential building construction and/or reconstruction (unless such reconstruction is intended to
convert the building to a business use).
4. Other activities that the RLF Committee may identify as inappropriate for the RLF program.
3.6 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 shall be provided for each
dollar of RLF investment. Private investment is defined as new equity injected and/or
financing from private lending institutions or public sector loan programs other than the
RLF. The applicant contribution to the project will be determined by the private lending
institution.
On a selective basis the RLF inay 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 City's------Committee.
2. Cost Per Job. A minimum of one full-time position as defined as 2,080 hours/year shall be
created or retained for each $12,500 of RLF funds requested. On select cases, projects
outside of the established cost per job parameter may be awarded with approval of the RLF
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Committee and justification of the exception provided in the quarterly report provided to the
City.
3. Financial Feasibilitv and Business ViabilitX. The applicant shall demonstrate that the
proposed project is viable and that the business has the economic ability to repay the funds.
4. Compliance with Applicable Laws. Applicants shall comply with all applicable local, State
and Federal laws and codes.
5. Project Com�pletion. Each loan project completion timeline will be customized to the needs
of the project and the discretion of the RLF committee.
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. Loan Amount. The amount of funds available for any single business enterprise shall range
from a minimum of$50,000 to a maximum of$200,000.
2. 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.
3. 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 RLF Committee will use current RLF and
industry standards as foundational guidelines.
4. Repayment. Deferral of principle 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.
5. Prena,�. There are no prepayment penalties.
6. 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 RLF project, 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
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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.
7. 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. GO-EDC and the City shall be listed as an
additional insured on all such insurance policies.
8. Equity Requirements. The RLF program may require an equity injection for each RLF 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 RLF project.
9. Structure. The RLF Committee may offer multiple approaches with minimum standards, as noted in
section 4.1,including the possibility of participation agreements with approved partners.
SECTION 5:APPLICATION PROCEDURES
5.1 INITIAL CONTACT
Prior to submitting an application, all RLF applicants must discuss the program with staff, who will
provide assistance, as is necessary, in completing an RLF 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 RLF funds exceeds available
funding, RLF 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 GO-EDC that includes the
following:
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1. RLF 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 GO-EDC.
5.5 REVIEW PROCESS
Specific steps in the review process include the following:
1. Preliminar,y Review. GO-EDC 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 90 days of acceptance.
5. 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 A�proval. The Revolving Loan Fund Committee sha�l review and approve a complete
application for each eligible applicant.
2. Loan Agreement. GO-EDC 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 GO-EDC 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 GO-EDC and the business, and specify the amount and terms of
the loan funds to be delivered.
4. Securi . Mortgage and/or lien instruments and personal guarantees provided as security for all
loans shall be prepared by GO-EDC or designee and executed at the time of the loan closing. GO-EDC
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
� Assignment of life insurance
g) Property-casualty insurance binder
h) Personal guarantee
i) Other documentation as may be appropriate
5. 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
RLF 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
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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.
8. Other pocumentation. Documentation shall be provided by the applicant to evidence that all
required permits,licenses,and registrations have been obtained prior to the release of RLF 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
� 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 and the Department of Financial Institutions.
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 RLF monies.
2. To use RLF monies only to pay the cost of services and materials necessary to complete the RLF
project or activity for which the funds were awarded.
3. To permit inspections by persons authorized by GO-EDC 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 the GO-EDC 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.
5. To submit the following documentation during the outstanding term of the RLF loan:
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a. Quarterly financial statements that are certified by the borrower
b. Annual financial statements of at least compilation quality by a certified public
accountant
c. Signed copies of corporate Federal income tax returns
d. Evidence of loan use and job requirements
6. To maintain property-casualty insurance for the property financed with RLF monies for the term of
the RLF loan.The City and GO-EDC shall be listed as an additional insured on the policy. In addition,
key-person life insurance coverage naming the City and GO-EDC 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.
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 JOB CREATION AND RETENTION
Staff shall monitor the borrower's progress in meeting agreed upon job creation or retention
goals.Job creation shall be documented using before- and after-project payroll records provided
by the borrower.
8.3 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 GO-EDC'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 30 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 RLF PROGRAM
Repaid RLF monies shall be deposited in the RLF account and used in a manner consistent with
the RLF inanual. A separate record for each loan shall be kept to account for all funds loa.ned.
GO-EDC will contract with a licensed certified public accountant (CPA) to conduct an annual
financial audit of GO-EDC. GO-EDC will also contract with the CPA to perform an agreed upon
procedures engagement,the purpose of which is to test individual RLF account files for evidence
of compliance with loan terms and conditions. The number of files to be tested annually will be
mutually agreed upon by GO-EDC and the City. A copy of the financial audit and agreed upon
procedures report will be submitted by GO-EDC to the City.
SECTIOIV 10: LOAN SERVICING
10.1 MONITORING
GO-EDC 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:
1. Loan Application File. The loan application file shall include:
a. A copy of the RLF application
b. Business plan documents
c. Business plan financial statements,personal financial statements
d. Other supporting loan information submitted to GO-EDC, including all applicable
correspondence
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.
2. 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
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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.
3. Financial Management File. RLF financial management records shall be maintained that include
the following registers:
a. RLF Register: A record of all deposits and disbursements to and from the RLF, including funds
used for RLF administration.
c) RLF Loan Repa,yment Register: A record of all repayments made by each business that has
received a loan from the RLF, as well as the balance of repayments from all RLF loans. This
report will be reviewed at least quarterly by the RLF Committee.
d) Collection Register: A register for each loan that contains the business name, loan date, loan
amount,terms,and date repayment begins.
4. "Tickler File" S, sv tem. A tickler file system shall be established and maintained to ensure that
loan repayments, financial information, the loan agreement, UCC updates, and other
documentation 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
£ 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
5. 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.
6. 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.
7. Repapment Monitoring File. The repayment monitoring file shall include the loan amortization
schedule and status of payments on the RLF 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.
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8. Loan Review File. All loans shall be reviewed on an annual basis, and at such other times as may
be deemed necessary by GO-EDC 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
GO-EDC as part of the City of Oshkosh RLF 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 GO-EDC 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 material 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 GO-EDC treat the following items, if provided, as TRADE SECRET:
Yes No NA
A. Personal financial statements. ❑ ❑ p
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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