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VII. PARTICIPATION AND FUNDING <br />The RLGP will continue to operate as a public/private sector partnership. <br /> <br />The financial base of the public share of RLGP funds will be interest and principal repayments <br />resulting from the initial $50,000 of loans. <br />The fund will continue to provide one-half of each small business loan up to a maximum of <br />$20,000 (from the fund) at an interest rate of two percent, provided that funds are available. <br />Multiple loans may be made to businesses, provided that the principal balance does not exceed <br />$20,000 (from the fund) at any time, and also provided that all payments of principal and interest <br />are current. <br />Local banks will execute participation agreements with the EDA to carry out their participation <br />in accord with these guidelines. <br />VIII. LOAN STRUCTURE <br />A. The RLGP shall provide a 100% match to private loans up to a maximum amount of <br />$20,000 RLGP participation. <br />B. The interest rate of the RLGP loan shall be two percent per annum. <br />C. The RLGP loan shall be amortized over a 10-year term but shall, at the option of <br />either the lending institution or the business, be renegotiable at the end of each three- <br />year period, but no loan including extensions shall exceed 10 years. In no event shall <br />the interest rate on the RLGP loan change from two percent per annum. <br />D. RLGP loans in the amount of $8,000 or greater must be fully secured with a perfected <br />security interest as determined by the lender. <br />E. The City subordinates its position on the RLGP loan to that of the lending institution. <br />IX. UNDERWRITING STANDARDS <br />A. Small and medium sized commercial buildings are defined as those buildings whose <br />gross square footage does not exceed 30,000 square feet. <br />B. Businesses receiving RLGP loans shall not have more than five (5) or more locations, <br />franchises, or chains. <br />C. Types of businesses receiving RLGP loans shall be legal permitted or legal <br />conditional uses within their respective zoning districts. <br />D. RLGP loans shall be made to fee owners or recorded contract for deed vendees. <br />X. FINANCIAL GUIDELINES <br />A. Applicants shall demonstrate a ratio of net operating income (NOI) to debt service of <br />1.1:1. NOI = Gross property income less operating expenses and real estate taxes, but <br />not including mortgage payments, income tax depreciation or non-operating <br />expenses. <br />B. Participating financial institutions shall use customary lending practices in <br />determining eligibility for RLGP loans so as to ensure repayment of principal. <br />4 <br />9 <br /> <br />