Terms and Conditions

All terms and conditions of loans shall be negotiated between the Loan Review Committee and the successful applicant. Final approval of terms and conditions will be made by the Shullsburg City Council.

A. Type of Loan: A loan from the RLF shall be a direct loan to the Business. The loan shall be an installment loan with interest and principal payment deferrals allowed for up to two years. These deferrals must be justified, and necessary for the project to be feasible.

B. Interest Rates: The interest rates on the loan may be below market rate for the first five years of the loan, but not less than 2.00%. The maximum deferral period for principal and interest payments is two years. If interest payment deferral is approved, interest accrues and must be paid later. If below market rates and/or deferrals are requested, justification shall be provided by the applicant. The actual interest rate during the first 5 years, and the length of the payment deferral, shall be determined by the business financial projections. The interest rate and payment deferral period, shall be set so the business can achieve "earnings before taxes" that are standard for their industry. The industry standard shall be taken from the current edition of standards as published by Robert Morris Associates. After 5 years or when the business is projected to earn profits higher than the industry standard, interest rates shall be increased to market rate and set for the remaining term of the loan. Market rate is defined as prime plus 2 and shall be determined at the time the agreement is signed with the Business.

C. Size of Loan: The size of loans will be determined by the availability of funds, the demand for available funds and the number of jobs created by the project. Generally, RLF loans should not exceed $50,000. There is no minimum loan size.

D. Loan Origination Fee: The City reserves the right to charge a service fee if interest income is not sufficient to cover administrative costs. Fees would be on-time fees and may vary with the complexity of the loan package.

E. Loan Term: The loan terms will be (1) 5 years for working capital loans; (2) Equal to the expected life value fo the assets used for security, up to 20 years; or (3) up to 20 years if secured by real estate. Flexibility in loan terms and payment amounts may be provided (See Loan Payments, below).

F. Security: The City will take a subordinate position in securing a RLF loan. The City will not accept a collateral position lower than third. The City will require reasonable security for 100% of the loan. Typical security may include a second real estate mortgage, second position liens on business assets and personal guarantees.

G. Loan Acceleration: The terms of loans, once approved, may be accelerated if (1) the Borrower or organization moves from the City; (2) the Borrower or organization is found to discriminate on the basis of race, color, creed, religion, sex, sexual orientation, age, national origin, or physical handicap; (3) the organization is found to be in non-compliance with federal or state environmental laws; or (4) the borrower fails to comply with the terms of the financial agreements.

H. Loan Payments: Individual loan repayment agreement will detail the repayment schedule for each borrower. The initial loan payment shall be no later than the first day of the month following the agreed upon deferral period. For projects without a deferral period, the initial payment will be required on the first day of the month following the first full month after the agreement. In this case, during the period when funds are being disbursed, only accrued interest is due until the first day of the month following the final disbursement. At this time, principal and interest payments pursuant to the agreed upon schedule shall be made. This first payment, and the monthly or quarterly payments thereafter, shall be paid in the an amount and manner necessary to fully amortize the principal and accrued interest over the life of the loan. The loan may include a balloon payment provision. Loan payments from borrowers will be made directly to the City Treasurer in accordance with the individual lending agreement. The City will use all legal means available to collect loans that become delinquent. Flexibility may be provided in the terms of the repayment to include, but not be limited to: (1) deferment of first payment; (2) payment of principal only for a period of time; (3) restructuring of the loan; (4) extensions; and (5) amortization for a longer period than the loan terms with the balance due at the end of the term.

I. Other conditions: (1) The applicant is expect to create the obligated number of jobs within 18 months of the date of approval; (2) The applicant shall not discriminate upon the basis of sex, race, creed, color, class, sexual orientation, national origin or ancestry in any employment or construction activity related to use of revolving loan funds; (3) The applicant shall use the loan money only to pay the cost of services and materials necessary to complete the economic development activities for which the loan funds were awarded and shall permit the City the right of audit/inspection to verify compliance; (4) The applicant shall permit inspections by persons authorized by the City of the all projects and properties assisted with the loan funds. Related project materials shall also be open to inspections which include, but not be limited to, contracts, materials, equipment, payrolls, and conditions or employment. Requests for inspection shall be complied with by the applicant within four working days of the initial request; (5) The applicant shall keep such records concerning the economic development work as may be requested by the City. These files shall be maintained for at least three years after the completion of the work for which the loan has been obtained; (6) The applicant shall maintain fire and extended coverage insurance on the project property as required during hte term of the business loan. The City shall be listed as an "other insured" on the policy. Term life insurance may be required of the applicant to cover the loan balance throughout the life of the loan; (7) Each loan shall be subject to the applicable provisions and requirements of the Federal Truth in Lending Act and the Wisconsin Consumer Act, as amended; (8) Applicants must abide by all Federal laws, when applicable. These include, but may not be limited to, the Civil Rights Act of 1964, the Age Discrimination Act of 1975, the Davis-Bacon Act, as amended, the Contract Work Hours and Safety Standards Act, the Copeland "Anti-kickback" Act, and all regulations pursuant to these Acts; (9) Failure to Comply: Failure of an applicant to comply with the terms and conditions of the agreement will be reviewed on an individual case by case basis by the City. The action to be taken in the event of such failure to comply is at the discretion of the City and may take the form of liquidated damages, calling the full balance of the loan due, retroactive increase in interset rate as will be provided in loan agreements, foreclosure on assets securing the loan and/or action on personal guarantees. The Loan Review Committee shall make an initial decision after giving the affected party an opportunity to present its case. If the affected party does not agree with the City decision, it shall have 15 days to appeal by submitting a notice appealing the decision to the City. In the event of an appeal, the City Council shall review the decision and may affirm or modify the decision. The City Council shall have 45 days in which to make its decision. Any penalties and payments will accrue to the RLF account.

K. Disbursement of Loan Proceeds: The City loan proceeds, in most cases, shall be disbursed in amounts proportionate to the private funds. Funds shall be disbursed only after the following have been met: (1) The City and the business have signed a mortgage, promissory note and an agreement relating to the uses of the loan funds, loan terms, conditions, repayment schedule, and security; (2) the City has determined the business to be in compliance with the terms and conditions of their agreement; (3) The activity or equipment for which the funds are being requested have been satisfactorily completed and/or delivered and inspected by the City. (Note: down payments for equipment prior to delivery may be approved providing there is an acceptable signed contract witht he vendor stating the conditions of sale, including delivery date.); (4) Invoices, approved Requests for payment, or other documents shall be provided by the Business supporting the disbursement; (5) Waivers of Lien covering all work for which payment is requested, executed by contractors, subcontractors and material men; (6) Clearance of project action by all relevant permitting agencies; (7) Proof of commitment of private financing; (8) Documentation of use of obligated funds.