October 24, 2018 – The Bi-State Revolving Loan Fund (BSRLF) is celebrating 33 years of providing gap financing to businesses, according to Jim Tank, RLF Program Representative and Bi-State Commissioner. Mr. Tank reported that since the inception of the program in 1985, over $10.5 million has been loaned to 112 businesses in Rock Island and Scott Counties. These loans have helped generate over $439 million in total investments, accessing city and state public financing programs, financial institutions, and company equity. In addition, over 3,900 jobs have been created/retained in the two county area. Currently, there is approximately $700,000 available to loan.
Donna Moritz, Revolving Loan Fund Program Administrator presented the Commission with information on the Mercer-Muscatine Revolving Loan Fund Program (MMRLF). She stated there have been $598,000 loaned to businesses in Mercer and Muscatine Counties. These loans have helped generate over $43 million in total investments. Currently, there is $333,000 available to loan for Mercer & Muscatine businesses.
Henry County’s RLF, administered by Lori Merrill, has approximately $200,000 available to loan to Henry County businesses with very similar requirements. Information for this program can be found on Henry County’s website www.henrycty.com.
Ms. Moritz reviewed guidelines and processes for both the BSRLF and MMRLF programs. She stated companies in need of gap financing could find an application and program guidelines at www.bistateonline.org by clicking the RLF Programs link on the left hand side of the home page. They should submit this application to the economic development staff for the community where the business is located or to Bi-State Regional Commission. They need to prove their need for gap financing by providing a letter from their primary project lender/financial institution stating the gap and reason for not fully providing total lending. RLF funds cannot be used when conventional financing is available.
The loan amount is based on number of jobs the business will create or retain in two years. Other criteria reviewed included an owner of 20% or more must provide a personal guarantee, 10% of the total project cost should be funded by owner equity, adherence to federal laws and regulations is required, and the loan will be collateralized with a security agreement, mortgage, and/or UCC filings. Total public funds into a project maximum are 1/3. Once the application satisfies community and RLF staff reviews, the RLF Board determines if the project and loan request is approved.
Loans terms are typically 3 years for working capital, 5 to 7 years for equipment, and 7 to 10 years for real estate/fixed assets. The interest rate is below market with a floor of 75% of prime. Priority is given to manufacturing/industrial projects, then service, and lastly to retail businesses.
Ms. Moritz then reported on the new risk rating system for EDA RLF programs. There are six categories: capital, assets, management, earning, liquidity, and strategic results for a total of 15 measurements. A score is given that affects reporting frequency and could result in a corrective action plan. Bi-State’s programs scored an A & B, which was very good with all categories and measurements except liquidity. There is too much cash to lend compared to our counterparts in this EDA region. Bi-State has two years to improve this measurement until a corrective action plan, sequestration, or possible return of grant funds to EDA would be required.
Ms. Moritz requested ideas to market these programs. The Commissioners suggested contacting bankers, credit unions, business brokers, commercial real estate brokers, leasing companies, construction equipment dealers, SBA local representatives, Chambers of Commerce, and Small Business Development Centers. Ms. Moritz and Bi-State Regional Commission Executive Director Denise Bulat stated Bi-State has working relationships with many of these organizations including SCORE and appreciated the suggestions and discussion. Ms. Bulat stated staff would gather email information to provide updated information to all the suggested contacts.
Bi-State Regional Commission Chair Carol Earnhardt suggested Bi-State participate in the Scott County Economic Summit at the Waterfront Convention Center on February 28, 2019. Ms. Bulat stated Congresswomen Cheri Bustos generally has an Illinois Economic Summit in the spring at Augustana College. Staff will plan to market the RLF programs at these events.