Great Northern Services Loan Program
USDA Rural Micro-enterprise Assistance Program (RMAP) awarded a $300,000 loan and a $75,000 grant to GNS to capitalize a revolving loan fund. The fund provides for technical assistance and training to rural micro entrepreneurs and micro enterprises. Micro-business refers to those having ten or fewer employees.
GNS services all of Siskiyou County which is the 5th largest in California by area. This project creates jobs and assists businesses.
Eligible applicants include existing businesses as well as qualified business start-ups. Businesses may be corporations, partnerships or sole proprietorships that are licensed and are located in or expanding to Siskiyou County. Applications will be for-profit businesses. Projects will be commercial, industrial or service related. Some examples of eligible projects would be:
- Working capital (including license and permit fees)
- Purchase of furniture, fixtures, supplies, inventory or equipment
- Debt refinancing
- Business acquisitions
- Purchase or lease of real estate that is already improved and will be used for the location of the subject business only
- Construction and demolition project are ineligible for this program
Each project will be examined to determine its financial viability and thus the reasonable assurance that the loan will be repaid.
Borrowers will be required to pay for all loan associated costs, which include, but are not restricted to credit reports, recording fees, preliminary title reports. In addition, borrowers will pay a loan processing fee on all approved applications of 1.5% of the loan amount with a minimum of $150. Interest rates will range from 6% to 10% based on personal credit quality and security for the loan.
The maximum loan amount for the program is $50,000. Loan terms can range up to ten (10) years depending on the project being funded and security being pledged. Generally for loans 35K and below, the loan committee sets a maximum term of six years. There is no prepayment penalty associated with the loans.
All loans must be secured by collateral. No unsecured loans will be made. Types of collateral will depend on the situation but are not limited to the borrower’s available security, the loan amount and terms. A lien on real property is the preferred method of securitization. The loan committee would prefer an 80% or less LTV on real property (i.e., borrower should not owe more than the value of the property). Personal guarantees are also required.
The loan underwriting policies of the GNS Loan Fund are designed to promote expedited access to capital for qualified business owners. To facilitate this, we have designed a two-tiered application process.
- For existing businesses, the initial application will be significantly streamlined requiring minimal information about the business. For businesses with a good track record and credit qualified owners able to provide adequate security, this may be all that is required.
- For start-ups or existing businesses that don’t meet the above criteria, additional information will be necessary. This will include some or all of the following:
- Personal Financial Statement
- Business/Marketing Plan
- Profit and Loss Forecast
- Business and Personal Tax returns
- Cash Flow Projections
- Resumes for Key Personnel
Each applicant’s personal credit report will be analyzed to determine good character. Each project will be examined to determine its financial viability and thus the reasonable assurance that the loan will be repaid. Depending on the project, the current and past financial statements for both the business and individuals may be analyzed along with tax returns and projections. The assumptions behind the projections will be critically analyzed. Income and expenses will be evaluated and compared historically, where applicable, and compared to industry averages. Project costs must be determined to be reasonable. Analysis of the business must also determine that past earnings and future prospects indicate an ability to meet debt obligations out of profit.
Statements and Payments
Economic Development Program Manager, E. Seata Madison at 938-4115 ext 113