MEC plays an active role in the development of our rural communities. Through its board of directors and staff, MEC provides both leadership and financial participation in the economic development and business expansion of our service territory.
Now, through the creation of a Revolving Loan Fund (RLF), MEC is seeking to improve the quality of life in rural areas by helping to leverage projects that create and retain job opportunities for rural residents; that provide technical assistance, education, or medical care to rural businesses or rural residents; that further the use of advanced telecommunications services and computer networks for medical, educational and job training services; and that upgrade the public infrastructure to improve the economic development potential of rural areas and the health, safety and medical care of rural residents.
MEC’s Revolving Loan Fund Loans
In general, eligible projects for loans can include any business venture, governmental public body, or entities involved in a community or economic development project that promotes job creation and/or provides needed community services that benefit rural areas, including loans to for-profit businesses and loans to not-for-profit entities. Uses of MEC’s Revolving Loan Fund proceeds may be for land, fixed assets, machinery and equipment, or working capital needs. Working capital loans will only be considered in conjunction with purchase of other assets as previously specified.
Ineligible Uses
Ineligible uses of MEC’s Revolving Loan Fund include pre-development costs, refinance of existing debts; illegal activities; legal activities that in the opinion of MEC’s Board of Directors adversely affect MEC’s Revolving Loan Fund interests; general improvement loans related to normal replacement needs of a business and unrelated to business expansion/job creation; and loans to projects which have alternative sources of financing at reasonable interest rates.
Loan Amounts and Supplemental Financing Requirements
The minimum loan will be $25,000 and the maximum RLF loan will be $360,000. MEC’s Revolving Loan Fund projects should include a minimum of 20% funding from other sources; greater leveraging of outside resources enhances the chance for approval of an RLF loan request.
Interest Rate and Fees
Interest rates on MEC’s Revolving Loan Fund loans will not exceed the prevailing prime rate as published in the Wall Street Journal and will be determined based on the evaluation of ability to repay and the necessity of below market financing to make the project happen. An annual loan servicing fee of up to 1% of the unpaid balance may be charged to help cover administrative costs of MEC’s Revolving Loan Fund. Borrowers may be charged for loan closing costs, attorney’s fees, filing fees, etc., as necessary to complete loan documentation. All loan fees will be addressed in the Loan Agreement between MEC and the loan recipient.
Loan Terms
The term of a MEC Revolving Loan Fund loan shall not exceed 10 years and may be less than 10 years as determined by MEC’s Board of Directors. The Loan Review Committee will make a recommendation concerning the term of the loan depending upon project need, the expected life of the security and the applicant’s ability to repay. The term of the loan will not exceed the expected life of the asset(s) being used as collateral. While not mandatory requirements, the following maturities will be used as a general guideline:
Building 10 Years
Real Estate 10 Years
Equipment 5 to 7 Years
Working Capital 1 to 3 Years
Collateral
Loans will be collateralized, as determined necessary by MEC’s Board of Directors, to secure its participation in the project and can include, but is not limited to, mortgages, liens, letters of credit and/or personal and corporate guarantees. Other terms and conditions may be required as determined by MEC’s Board of Directors, depending upon individual circumstances, including but not limited to, assignment of leases, subordination agreements, life insurance, etc. The loan recipient will be required to maintain appropriate insurance on all secured assets and name MEC’s Revolving Loan Fund as loss payee.