An RLF Providing Affordable and Flexible Business Loans That Create and Retain Business and Jobs in Buffalo, Jackson, Pepin, Pierce, and Trempealeau Counties.
What is the Revolving Loan Fund (RLF)?
The Business Capital Fund (BCF) is a revolving loan fund (RLF) developed by the Mississippi River Regional Planning Commission to address a gap in private capital markets for fixed rate, low down payment, low interest financing. The Fund is targeted to businesses in Buffalo, Jackson, Pepin, Pierce, and Trempealeau Counties. The Fund serves as a stimulant for commercial lending and not a substitute for private capital.
How was the fund created?
Initially the Business Capital Fund was capitalized at $667,000 in 1990. A $500,000 federal grant (75%) was provided from the U.S. Department of Commerce-Economic Development Administration and another $167,000 (25%) in matching contributions was raised from local units of government, lending institutions, utilities and businesses. An additional grant was awarded to the MRRPC after the flood of 1993 that allowed Pierce County to be served by BCF lending.
What is the goal of the fund?
The overall goal of the fund is to improve the area economy by providing "Gap" financing for business expansions that create or retain jobs. The Business Capital Fund is self-perpetuating through loan repayments by borrowers. The designation of the Business Capital Fund as a Revolving Loan Fund is derived from this lend and repayment activity. This revolving characteristic will allow it to serve as a long-term loan source for expanding business well into the future.
How will this fund achieve its goal?
It will meet its goal by providing reasonable loan terms, low down payment requirements and below market rate financing. These favorable terms from the Business Capital Fund will allow a participating lending institution to take a business loan risk they normally would not take. In so doing a business expansion results and jobs are created that under ordinary circumstances would not have occurred. In all instances the BCF loan will be in conjunction with a larger private loan.
Why is the fund needed?
Small businesses create the most jobs but suffer from a shortage of financing to meet their needs. Eighty percent of the new jobs in the nation and the great majority of jobs in western Wisconsin are created by businesses employing less than 100 people.
Ironically those businesses which create the most new jobs are the least able to obtain reasonable financing for job creating business expansions.
How is the fund managed?
The Mississippi River Regional Planning Commission (MRRPC) is the federal grant recipient. The MRRPC has delegated loan decision and administrative responsibilities to the nine-member Board of Directors of the Business Capital Fund Corporation. This Board of Directors at various times includes representation from financial institutions, local units of government, utilities, and local development organizations.
Are there any Federal requirements?
Loan recipients are required to adhere to several Federal regulations such as National Environmental Policy Act, Civil Rights Act, Davis Bacon Act, Flood Disaster Protection Act, and National Historic Preservation Act. A certificate of non-relocation is also required. The MRRPC staff serving as the RLF administrator will inform the borrower of the above and any other Federal regulations they are required to adhere to.
Is there an application fee?
All loan closing costs will be paid for by the borrower. A fee not to exceed $300 may be charged with the submission of a loan application. If the loan is approved by the Business Capital Fund Loan Board an additional fee not to exceed $500 is required to cover administrative expenses for monitoring special provisions of the loan relating to employment commitments, civil rights, and the environment.
Who to contact for additional information?
Mississippi River Regional Planning Commission, 1707 Main Street, Suite 435, La, WI 54601, Telephone: (608) 785-9396, Fax: (608) 785-9394, Email: plan@mrrpc.com.
What Standards and Loan Criteria will the Fund Use?
- Loan Sizes - in the $10,000 to $130,000 range are preferred. The maximum loan to a single borrower is $300,000.
- Job Creation - a minimum of one job created or retained for every $20,000 to $42,000 of RLF financing.
- Loan Ratio - for purpose and protection of the RLF loan portfolio, $2 of private financing to every $1 of RLF financing is required.
- Participating Lender - money from this loan fund is always in conjunction with a sponsoring senior lender or other investment capital. To apply for an RLF loan a business must also secure private financing. The sponsoring senior lender will also be invited to appear at the RLF Board meeting to answer questions concerning the loan and the servicing of the RLF loan if it is approved.
- Equity - each project will require a minimum of 10% equity.
- Uses of Funds - Real estate, working capital, and equipment all are eligible financing uses. Adequate collateral and security requirements will be sought on all RLF loans. The RLF may take a subordinated position behind a senior lender.
- Refinancing of Existing Debt - by businesses will be considered if the recipient sufficiently demonstrates in the loan documentation a “sound economic justification” for refinancing (e.g. the refinancing will support additional capital investment intended to increase business activities).
- Loan Terms - land and buildings up to 15 years and amortized on a 20-year basis with the option for refinancing for an additional 5 years, equipment and machinery expected life but not to exceed 10 years and working capital up to seven years. Balloon payments and a transition to private financing after an agreed upon timetable are likely to be part of a loan. If a loan cannot be secured, the RLF loan will be extended.
- Interest Rates –Usually 1% plus or minus the current money prime interest rate quoted in the Wall Street Journal.
- Deferred Payments - the initial loan principal payments, if needed, may be deferred up to one year. Interest only payments are required during the deferred period.
Application Procedure
Interested businesses can complete and submit applications directly to Mississippi River Regional Planning Commission. Applications are processed on a first come first serve basis.
Prior to completing a loan application, contact the Mississippi River Regional Planning Commission (MRRPC) at (608) 785-9396 to see about the amount of loan funds available.
Please submit your application online securely using the button above. Our secure, online application encrypts your personal information including all of your supporting exhibits. Completing your application online will ensure your application is reviewed and handled efficiently.
If you prefer to print and mail your application, use the button below. You may also print and drop-off your application and support exhibits at MRRPC as well.