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financial assistance. The terms and conditions of such financing <br /> must be acceptable to the Oakdale EDA based on the small <br /> business concern's ability to repay the Oakdale Seed Fund Loan. <br /> Interest Rate The lender and EDA may establish their own rate provided the rate <br /> is legal and reasonable. The lender and EDA may charge either a <br /> fixed or variable rate of interest on their loan. A renegotiable rate <br /> of interest is acceptable provided terms and conditions are <br /> established and agreed to both by the Oakdale EDA and the lender <br /> at the time of the loan approval. The EDA must be aware of the <br /> lender's terms and conditions in assessing the small business <br /> concern's ability to repay the Oakdale Seed Fund Loan. <br /> Balloon Payment Such payments may be considered where circumstances warrant <br /> their use. <br /> Amount The maximum amount of private lender financing should be <br /> included in each project. At least 50% of the project cost should be <br /> funded by a private lender. <br /> Maturity Maturity must be reasonable in relation to the life of the asset <br /> being financed. In no instance should the maturity of the Oakdale <br /> Seed Fund Loan exceed the maturity of the loan being provided by <br /> the private lender. <br /> Personal Guarantees The EDA requires the personal guaranty of any person owning <br /> 20% or more of the small business concern regardless of the form <br /> of ownership. Where ownership ranges from 5% to 19% the <br /> requirement for personal guarantees is discretionary. A partial <br /> guarantee may be considered for less than the total amount of the <br /> loan. Generally, a guaranty will not be required where ownership is <br /> less than 5%. <br /> Alter Ego Loans For tax and other reasons some small business owners prefer to <br /> separate the ownership of the asset from the operating small <br /> business concern. In such cases the small business owners form <br /> two legal entities: One entity owns part or all of the fixed assets <br /> and the other entity is the operating company. Loans will be <br /> permitted to the "alter ego" (passive concern) which is an eligible <br /> small business concern when: <br /> a) The applicant (passive concern) is a business entity that is <br /> organized and operated for profit, whether operating as an <br /> individual proprietorship, partnership or corporation; <br /> 56 <br />