MDLF Loan Program

OBJECTIVE

The primary objective of the Cattaraugus County Microenterprise Development Loan Fund Program (MDLF) is to create opportunity for the establishment and expansion of microenterprise business within Cattaraugus County, to promote employment opportunities for low-to moderate-income County residents, and to preserve and expand the County's tax base.

ELIGIBILITY REQUIREMENTS

Any commercial business activity that meets the MDLF objectives is eligible for MDLF assistance. Eligible borrowers under this program must be a microenterprise, which is described as a commercial enterprise having five or fewer employees, including the owner(s). The form of the microenterprise may be a sole proprietorship, partnership or corporation. The business must be located in Cattaraugus County.

MDLF DOLLARS AVAILABLE

The MDLF is a revolving loan fund and loans are all made continuously through the year from the program. Capitalization for the MDLF is made available through grant funding from the Federal Government Department of Housing and Urban Development and the New York State Governor's office for Small Cities. These funds may be utilized for any justifiable business purpose including: fixed assets, inventory acquisition, permanent working capital and/or capital improvement expenditures. Loan proceeds cannot be used to reduce debt.

MDLF LOAN DOLLARS

The MDLF minimum loan amount is $5,000 ; the maximum loan amount is $30,000 for any one project.

• The interest rate charged on these loans will be set at closing and shall not exceed prime rate.
• The Term of the loan, generally is seven years for fixed assets financing and five years for working capital.
• All loans shall be secured with either business and/or personal assets, and shall include personal guarantee(s).
• Any one individual can apply for up to three loans during the life of the program. Loan approval is based upon current business performance. Prior loan approval does not guarantee subsequent favorable decisions.

FEES

A $150.00 non-refundable application fee is due upon approval.

FACTS

• There is no guarantee that any of the applicants will receive funding through the MDLF.
• There are other funding sources available for microenterprises in Cattaraugus County. We also encourage clients to try their local banks for financing purposes.
• As the MDLF is publicly funded, press releases may be published in local papers to inform the public which businesses in their local areas have received benefits from the MDLF and the amount that they received.
• MDLF funds are available in conjunction with bank or other forms of public financing.

REQUIREMENTS

In order to be considered for the Cattaraugus Count Microenterprise Loan Program, the following must be completed:

• Compliance with HUD Guidelines
• MANDATORY attendance of the seven-week seminars conducted by the Business Development Corporation. These classes are presented in various locations rotating throughout the Cattaraugus County in Fall, Winter and Spring sessions. Class waivers are at the discretion of the CCBDC and are given only in instances with specific background /histories that favorably impact the proposed business.
• Completion of a Business Plan. The business plan includes, but is not limited to: narrative, three years of project financial statements, a personal financial statement, last three years of tax returns, along with a completed loan application. Business Training classes include in-depth business plan development; a business plan development guideline is available called "Components of a Small Business Plan."

HUD/NYS GUIDELINES

ELIGIBLE ACTIVITIES

• The business must be located in Cattaraugus County.
• The business owner must meet the low-to moderate-income levels specified by HUD unless she/he will be creating jobs for low-to moderate-income individuals. There are quarterly and annual reporting requirements concerning employment.
• The business must be classified as a microenterprise. A microenterprise is a business that has five or few employees, including the owner of the business.
• The money that is being borrowed must be used for a justifiable business purpose, including: fixed assets, working capital, inventory, equipment, etc.

MICROENTERPRISE DEVELOPMENT LOAN FUND STANDARDS

• The business plan must have a reasonable likelihood for long-term viability.
• When the business will be employing individuals, 51% of the jobs that are created must be made available to low-to moderate-income persons. Calculation of employment opportunities uses the following standards:
  • Only permanent employees will be counted. Seasonal positions will not be counted.
  • 35 or more hours per week will be considered full time. When part-time positions are available, they must be converted into full time by diving the number of part-time hours by 40.
  • If the job is seasonal, it can be considered permanent if the duration of the working period is long enough to classify the job as the employee's principle occupation.
  • Projected employment must be reasonably expected to occur within 36 months.
  • The amount of the loan is not to be greater than the minimum amount necessary to produce or expand the business.
  • The minimum amount of the loan is $5,000 and the maximum amount is $25,000.

LENDING POLICIES

• The payback and amortization schedule starts upon closing of the loan.
• The term of the loan will be consistent with the life of the assets being financed: strictly fixed assets, seven years; everything else, five years.
• The interest rates charged by the Microenterprise Development Loan Fund is below the prime rate.
• The repayments terms are determined by the Loan Committee. Repayment decisions are based upon the applicant's projected ability to repay the loan and projected value of security and risk.
• A Preliminary Environmental Assessment must be made to determine if the use of the loan proceeds has a significant impact on the environment.
• Davis/Bacon rules apply when there is construction involved that the business owner is unable to do him/herself. This ensures the payment of prevailing wages.
• Cattaraugus County will determine required collateral on an individual basis based upon risk, collateral and position of MDLF in relation to other lenders.
• Once the loan is approved, the Cattaraugus County Treasurer oversees loan performance and promptness of payments. If a loan becomes delinquent for any reason, the Treasurer's Office will manage the collection process as outlined in the MDLF Loan Management profile.

APPLICATION PROCESS

• Applications must be complete and must include all information.
• An application fee of $150.00 shall apply only after the approval of the loan.
• The processing of applications will consist of the following:
  • Review of the MDLF program criteria and eligibility
  • Review of the application's completeness and information
  • Determine feasibility, credit analysis and risk assessment. Credit analysis includes procuring a current credit report on the business principals.
  • Perform appropriateness review in conformance with HUD guidelines
  • Prepare a written report to the Program Loan Committee summarizing the review process and providing recommendations
• The loan committee will include up to 10 individuals. The committee members are business professionals appointed by the Cattaraugus County Legislature.
• Loan Disapproval: Loan decisions are made solely by the Loan Committee members and not by CCBDC employees.
  • Loan applications may be disapproved based on lack of completeness or by failure to meet eligibility criteria.
  • Loan applications may be disapproved at the direction of the loan committee if the committee determines the MDLF financing is inappropriate based on conducted reviews.

LOAN COMMITTEE APPLICATION GUIDELINES

OBJECTIVE

To put guidelines in place in order to give fair opportunity to all applicants and to streamline the application process.

GUIDELINES

• Applicant may apply once per one-year period. No more than three applications per business will be accepted over the life of the program.
• In order to reapply, at the very least, the criteria for denial must be resolved. (Please note, however, that resolution does not assure approval).
• No incomplete business plans will be accepted (i.e. all final information, including proof of low-to moderate-income and supporting documents, must be included).
• Applications are due three weeks prior to the next scheduled loan committee meeting.
• Applicants will be notified within two business days after the loan committee meeting of approval/denial via telephone and/or follow-up correspondence via US Mail.
• No application will be accepted if there are unpaid taxes due or other government monies owed (i.e. student loans).